International Network Services (INS) and Lucent Technologies Inc. officials hope Lucent’s impending merger with INS will make the combined entity a force in the communications networking integration market place.
But one analyst expressed some concerns about Lucent’s US$3.7 billion acquisition of INS, noting that the success or failure of the venture all comes down to employee retention.
“This is a competitive market and while I imagine Lucent is rewarding them (INS engineers) very attractively to get them to stay, there are many other cool companies that would like to have the skill set that INS employees have,” noted Ellen Carney, a Lowell, Mass.-based analyst with consultancy Dataquest Inc.
Based in Sunnyvale, Calif., INS is a network consulting and software services firm with offices around the world, including an approximately 50-person operation in Toronto. INS spokesperson Jeff Kaplan, said his company’s expertise in data networking is an excellent complement to Lucent’s voice networking strengths.
In the past, INS has recommended tools from a variety of vendors to suit its clients’ networking needs. Kaplan does not expect this to change with the Lucent acquisition, despite the fact that Lucent has a data networking division that competes with vendors such as Cisco Systems Inc. and Nortel Networks Inc.
“We want to maintain our multivendor perspective and independence, so we’re best meeting our clients’ needs,” Kaplan said. “The existing NetCare organization within Lucent has the same philosophy and wants to adhere to that as well.”
INS will become part of the NetCare Professional Services Group, which will employ approximately 5,500 people worldwide. John Drew, currently president and CEO of INS, will head the combined operation.
Kaplan noted NetCare will not be the only independent professional services group with an affiliation to a major networking vendor. IBM’s Global Services Group, he pointed out, has handled multivendor installations for many years and has a reputation for being independent and unbiased.
“Unless we maintain our integrity and independence,” Kaplan said, “we’re not going to succeed as a viable integrator.”
On the surface, said Dataquest’s Carney, Lucent and INS look like a perfect fit.
“Lucent is great on the voice side and INS is great on the data side,” she noted. “In theory, it’s a wonderful marriage. Whether after the honeymoon is over, INS employees will hang around long enough, I have real concerns about that, because Lucent bought people and people have feet and INS was a totally different culture from Lucent. I have a hard time believing Lucent will let them run independently,” she added.
Kaplan said employee retention has been a principal concern of both INS and Lucent in the merger and that the companies have tried to address it.
“The bulk of our energy prior to the announcement and since has been communicating not only to the market place what the value proposition is, but we’ve spent more time internally communicating the value to our people,” he said.
Lucent also announced a pair of smaller acquisitions last month. The company plans to acquire Excel Switching Corp. of Hyannis, Mass., for approximately US$1.7 billion and Xedia Corp. of Acton, Mass., for US$246 million. Excel is a developer of programmable switches that serve as bridges between circuit and packet networks, while Xedia develops Internet access routers.