THE head of Belfast IT firm Kainos expects the UK Government to continue pursuing major digisisation projects, amid warnings Rishi Sunak’s new administration will announce £35 billion of spending cuts in Thursday’s Autumn Statement.
Brendan Mooney was speaking as the London-listed digital transformation specialist reported a 16 per cent rise in half-year profits to £34 million on the back of a 26 per cent rise in revenue to £179.8m for the six months ending September 30 2022.
Kainos lists the UK government among its key customers.
Despite the Bank of England forecasting the longest recession on record, and tech giants such as Facebook, Twitter and Stripe, slashing their workforces, market analysts yesterday upgraded their earnings forecasts for Kainos over the next two years.
In a report breaking down the Belfast firm’s half-year performance, Investsec said: “The group has seen no signs of procurement slowdown despite the government narrative.”
Kainos chief executive Brendan Mooney said the IT group stands to benefit from the UK Government’s switch to digitisation as it seeks to find savings and efficiencies across departments.
“It’s about getting off old legacy, often inefficient systems onto a more cost effective, more modern platform,” he said.
The tech boss recalled that Kainos landed its first UK Government contract in 2011 as the former chancellor George Osborne embarked on an agenda of austerity.
In the years since, Kainos landed numerous large digital transformation contracts, from the establishment of a new MOT system for DVSA in 2015 to building the new voter registration and passport systems.
Mr Mooney said the MOT contract ended up saving the UK Governmet £160m in the first three years of the contract.
“As a broader societal impact, recession is not a good thing. The reality is it’s going to have governments focus very clearly on better services, more cost effective services for them.
“Back in June, the Government listed the next 75 services it wishes to digitize over the next three years. So that’s quite a significant amount of work,” he added.
The Kainos chief executive said the firm’s business model, which is increasingly spread across the government, healthcare and commercial sectors, “is becoming increasingly resilient”.
“Looking forward, we remain confident in our business as the demand for our services has never been higher, our reputation for delivery continues to flourish, while the scale and capability of our organisation continues to grow at pace.”
Kainos also reporting strong growth in its Workday platform for major employers. Mr Mooney said companies like Netflix and Walmart are now using the products.
“These are small products, but Workday has over 4,000 customers. So even a small product at a modest subscription price adds up to quite a lot of business.”
He said such products are expected to generate around £50m in sales for the company in this financial year.
The interim results come just days after Facebook, Twitter and Stripe announcement major jobs cuts.
While the recent story for the tech sector has been one of overreaching and subsequent downsizing, the Kainos boss said the Belfast-based firm remains commited to a policy of steady growth.
“We talk about 15 to 20 per cent growth per year, which we see as a controlled pace.
“As a services business, we didn’t do the same kind of rapid expansion that other organisations may have done.”
Nevertheless, Kainos added almost 500 new workers in the past six months, taking its global headcount to just under 3,000.
Mr Mooney said the IT group’s offices are currently averaging an occupancy rate of around 20 per cent on a weekly basis.
He said Kainos is not planning any change to its flexible approach to remote working.
“There’s no mandate from us to get people back into the office.”
But he said the group do plan to occupy its new £30m Belfast headquarters on the Dublin Road by 2026.
The company expects it will need half of the 80,000 sq ft of office space on day one for its own staff.
Mr Mooney said depending on how many choose to return to the office over time, Kainos could lease out any unused space.
“We’re not particularly planning to be a landlord, but it makes sense if we’re not using the space to let it out.”
Kainos announced last month that it plans to sell half the former Movie House cinema site to Queen’s University for new student accomdoaiton.
The IT boss also confirmed that the university has not formally purchased the site yet, but said Queen’s is Kainos’ preferred vendor.
