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The MCNews 12 Index of Professional Services

January 2010

For the eight months ending in December 2009, the MCNews 12 Index rallied to levels not seen since August 2008. In an impressive run, the Index returned more than 46 percent for 2009. In January 2010, however, that rally ran out of steam.

The mixed economic news suggests a reason for the slump. In the US, executives are hopeful for a turnaround, but more than a third of them still plan to make targeted headcount reductions in 2010, according to a survey by Towers Watson. They plan these actions in spite of some good news about GDP growth in the US and in other countries around the world.

January's dip doesn't necessarily portend darker days for the stocks in the MCNews 12 Index. Wipro, India's third largest IT services provider, for example, reported substantially higher quarterly earnings than expected. And analysts are encouraged by reports that many clients are jumping back into long-delayed projects.

Besides signs of growing client confidence, many consulting executives are plopping down money to build their practices. Korn/Ferry International bought Sensa Solutions, a management consulting firm that serves the US government.

Navigant Consulting also went on a buying spree. The firm announced that it acquired Empiris, LLC, a Washington, D.C. economics consulting firm, and Summit Blue Consulting, a leading energy industry consulting firm.

Overall, the market for services is looking up.

In the continuing saga of Anil Kumar, the former McKinsey & Company Director pleaded guilty to securities fraud charges in Federal Court. Kumar admitted that he provided insider information to Raj Rajaratnam, the founder of the now-defunct hedge fund, Galleon Group.

Kumar, 51, started tipping off Rajaratnam about McKinsey & Company clients in 2004. In exchange for his information, prosecutors said Kumar was paid as much as $2 million. When he is sentenced on March 26, Kumar faces up to twenty years in prison, and reportedly agreed to forfeit $2.6 million as part of the deal.

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.