CSC just went through another employee layoff, and it’s apparent that it might be as much as 5 percent of its total staff. This move comes within the backdrop of the impressive turnaround that CEO Mike Lawrie has been driving. Since he took over, the stock has done exceptionally well and is back up in the 60s. But can CSC pivot from cost take-out to growth?
The turnaround plan Lawrie laid out was to go through two years of cost take-out and then pivot to growth. Now at the two-year point, it appears that he has taken about $2 billion in costs out of CSC. Like the IBM playbook of cost take-out, he has succeeded in significantly increasing CSC’s margins — to the applause of the shareholders.
We’ve watched CSC in the marketplace during the turnaround, and its morale remains adequate and its ability to execute seems to have improved.
But the provider hasn’t been able to grow. To be realistic, the plan was always to address the cost base first and then grow. It will be interesting to see if CSC can now pivot from cost take-out to fast growth. As we’ve blogged before, at a minimum, the firm will need to grow quickly to offset the cloud-driven likely revenue losses in their mature core business.
We look forward to seeing how successful CSC becomes.
Photo credit: Philipp Pohle