Business services firms boosted by Y2K : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Please note that Y2K problems will last for YEARS. I think this is one issue that is forgotten when discussing Y2K. I wonder how many people believe that come Jan 3,2000 the problem is over.

MARK EVANS Technology Reporter Tuesday, June 1, 1999

Solving the year 2000 computer problem has been a headache for many companies, but a report from Statistics Canada indicates it has been a major boost for computer service and consulting firms.

In the first quarter, business services providers -- which includes jobs such as computer consultants, lawyers, accountants and engineers -- posted a gain in output of 2 per cent or annualized growth of 8.3 per cent. That compares with the overall economy's 3.4-per-cent rise.

As a total share of gross domestic product, business services now accounts for 5.9 per cent, compared with 5 in 1995.

Statscan said the business services sector was buoyed by the year 2000 bug, which is forcing companies to make heavy investments to repair hardware and software. Treasury Board President Marcel Massi estimates that Canada's public and private sectors will spend more than $50-billion to fix the problem.

The year 2000 computer bug, also known as Y2K, could affect many computers that use two digits to read the year. That means they could read 2000 as "00" and misinterpret it as 1900 -- a big issue for any computer system that uses dates in its calculations.

Among the computer consulting firms to reap the benefits of Y2K is LGS Group Inc. Analysts expect that one-third of the Montreal-based company's $220-million in revenue for the year ended March 30, 1999, came from Y2K.

LGS president Raymond Lafontaine expects the year 2000 business to remain healthy for the next couple of years as companies, which have been focusing on the repair of mission-critical systems, turn their attention to other parts of the business.

"People will be solving their Y2K problems until 2002," he said, adding that analysts expect about 20 per cent of LGS's revenue of $280-million in 2000 will be Y2K-related.

While the Y2K issue has been a major -- and lucrative -- theme in the computer services market, Mr. Lafontaine said the sector is being paced by several other factors such as contracting out computer systems and E-commerce.

Last month, LGS launched a new E-commerce business to give customers consulting and software services. The company expects revenue from that unit to reach $320-million by 2003 from $40-million in 2000.

Another area of growth for consulting firms is providing service to companies that want to hire someone else to manage and maintain their computer systems. Outsourcing leaves a company free to focus on core business and reduce costs.

-- y2k dave (, June 01, 1999

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