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The MCNews 12 Index of Professional Services

June 2010

You only need two words to sum up the MCNews 12 Index performance in May: Never mind. Last month, the Index fell by 6 percent, giving back the entire gain we've been reporting for the year--and then some. With the Index now hovering at 941, it has dropped to its lowest level since January.

The broader markets also plunged in May. The S+P 500 was off by more than 8 percent, and the Dow Jones Industrial Average had its worst month in decades.

With the European debt crisis in the news, the massive oil spill in the Gulf of Mexico, and the raging US debate on financial regulatory reform, it's easy to understand why investors are skittish: Markets abhor uncertainty, and there's currently plenty of that to go around.

For example, in an unexpected reversal, US consumers backed off last month. According to a Commerce Department report, consumer spending in April was its weakest in seven months. Some economists warn that, without stronger job creation and higher pay, people will be hesitant to spend.

Volatility is the watchword for the month--and for the year so far. On May 6, we witnessed the "Flash Crash," when the Dow lost almost 1,000 points in a matter of minutes. Accenture's stock price dove to a penny before recovering. It's not entirely clear what caused the calamity, but it didn't do anything for investor confidence.

In spite of this news, signs point to a growing services industry over the next 12 months. Expect stock prices to fluctuate, but look for client demand for services to grow.

Naturally, there will be winners and losers among professional services firms. Over the next year, the winning firms will shed the recession mindset, focus their current service offerings on emerging client needs, and sell effectively to value-conscious, price sensitive buyers.

The MCNews 12 Index reflects general investor sentiment about the state of the global professional services industry.

The twelve publicly-traded companies included in the MCNews 12 Index account for roughly $80 billion in combined annual revenue, and serve clients around the world.

What firms are included in the MCNews 12 Index?

Accenture Ltd.
Computer Sciences Corp.
Fiserv Inc.
Hewitt Associates Inc.
IBM Global Services
Infosys Technologies Ltd.
Korn/Ferry International
Navigant Consulting
Satyam Computer Services Ltd
The Hackett Group (Combined with AnswerThink)
Towers Watson (Merger of Watson Wyatt and Towers Perrin)
Wipro Ltd.

How is the MCNews 12 Index calculated?

Beginning in January 2007 with a base index of 1,000, we measure changes in each company’s monthly stock price and calculate an index value for each company. We then calculate the composite index value using an average of the index values of all the companies in the MCNews 12.