A very good point you bring up. Hiring (and retainage) costs are a very real cost to contend with in any service business, but a company of TAVA's size should have an internal HR function to do this, not using headhunters (other than for executive level spots). If they are using recruiters, they are paying way, way too much to bring new bodies on board (typically $10-15K per head, paid up front). However, given the historical turnover rate in the SI industry, this shouldn't be an "unplanned" cost, and should be budgeted for.
As far as the impact of pilot stage work, it shouldn't matter, as this work is almost all being done on a T&M basis at nice rates.
Given TAVA's theoretical economies of scale versus their smaller competitors, I would expect to see 5-10% pretax (as pct of revenues) on the core SI business, and considerably higher on the Y2K product and auditing revenues. Looking at the last year's financials, TAVA also appears to carry too many receivables...I guess what I'm saying in my long-winded way is that there's definitely opportunity to make money now, even in the Y2K ramp up mode. And the ramp is short. Gotta get up to speed FAST. And gotta make money on the core SI business.
My $0.05, before taxes. |
