Australian Web Integrators Go North

21 November

Posted by webmaster

The Asia-Pacific professional services and Internet integration space has been an active one of late with several significant mergers, acquisitions and alliances announced. While traditional professional services companies like the big 5 accountants, consultants and heavy weight law firms have been falling over themselves to stake their claim in the burgeoning Asian market, smaller players have been out forging alliances and winning business.

The new professional services frontier has also provided start-up Internet integrators like LibertyOne's Zivo, XT3 and Cortex e-Business to compete. In what looks to be an emerging trend in Internet professional services, Chinadotcom subsidiary Web Connection waded into Sydney earlier this week and bought XT3.

The XT3-Web Connection entity announced Monday involves Web Connection injecting capital into XT3 now for a controlling stake in XT3, with an agreement to take full ownership over three years - subsequent to a number of performance hurdles. The strengthened entity will be able to compete for more sophisticated projects with its larger team and knowledge base.

Hugh Morrow, MD of XT3, says his company prides itself as the "McKinsey of the Internet space". This skillset in strategy services combined with Web Connection's technical workforce should position the merged entity as a full service offering capable of large multi-million dollar projects.

Web Connection represents a large proportion of Nasdaq listed Chinadotcom revenue base and boasts clients like HSBC, AOL and Bosch. President and COO of Web Connection, Steve McKay sees the "presence in Australia via XT3" as an opportunity for companies to "penetrate the unique, high-growth Asian Internet community".

Last week Australian Internet pioneer Spike Networks announced a joint venture with Hong Kong based Pacific Century CyberWorks, bundling up Spike's professional services division into Spike CyberWorks. Even prior to the PCCW joint venture Spike had been hard at it in the professional services arena, forming alliances with the likes of Arthur Andersen. Together Spike and AA hoped to "deliver comprehensive and integrated eBusiness and consulting services."

Zivo is yet another Australian player with its eyes on Asia, co-founder and CEO Jeff Lewis said Spike and PCCW were a good fit. On the Zivo's own standing Lewis said, "I've spoken to a lot of the players in Asia and the US and will continue to do. So far the perfect marriage hasn't fit but we're not in any rush, we've got a great business and we're growing through acquisition and organically at a great pace we'll be acquiring businesses in North Asia this calendar year." Zivo has already demonstrated it is willing to make big deals in Asia, with the acquisition of Southeast Asian Web integrator xIBA and Net Power in Hong Kong last year.

Martyn Mitchell, who leads PricewaterhouseCoopers technology team in Australia, said Asia is crucial for Australian Internet players. "In this global market building a strong Asian presence is a key to success. I think Australian companies can have a first mover advantage over American companies in Asia," said Mitchell.

Several consultants who work in Internet services blamed the apparent absence of US players in the Asian market on the technology services boom in the US. "Why go looking for business when it comes banging on your door?" Seems to be the attitude of many US companies.

Australian Web integrators have a once in a lifetime window of opportunity in Asia. Big or small they all have an opportunityto grab and hold a stake of the market while their US counterparts are looking the other way. Once new business in the states tightens, Australian companies can be assured of some stiff competition as US players focus their sights on the Web Asian frontier.

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