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The MCNews 12 Index of Professional Services

May 2009

In May, the stock markets turned in their third consecutive month of encouraging results.

The major stock indices, including the S+P 500, surged forward, gaining another 4.7 percent in May. Over the past three months, the Index has gained 25 percent, which has some analysts cautiously suggesting that we are seeing signs of an economic recovery.

The MCNews 12 Index also pushed substantially higher in the three months ending in May, posting a 22 percent gain. But in spite of three months of strong performance, the MCNews 12 Index has yet to reach positive territory this year. Eight of the MCNews 12 Index companies are posting healthy returns, while Accenture, Navigant, The Hackett Group, and Watson Wyatt are still trading at prices below 2008 levels.

After reporting earnings and lowering its full year EPS forecast, Watson Wyatt, the global HR and financial management services firm, saw its share price slashed by more than 20 percent. If Watson Wyatt's share price had not taken that hit, the MCNews 12 Index would be showing a year-to-date gain.

In other news, Accenture announced a proposal to shift the company’s place of incorporation from Bermuda to Ireland, which would allow the company to enjoy the tax advantages offered by the Irish government.

Finally, four months after revelation of a major fraud at Satyam Computer Services rocked the global services industry, the markets have seemingly declared the scandal over. Satyam’s top managers confessed and were jailed, the board was fired, and the giant outsourcing company was sold. Two partners from the Indian office of PricewaterhouseCoopers, who proclaim their innocence, remain in prison, charged with multiple offenses, including dishonesty, cheating, falsification of accounts, and using forged documents.

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)
Watson Wyatt Worldwide Inc.
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.