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The MCNews 12 Index of Professional Services

March 2010

You might say that the MCNews 12 Index took a breather in January (the Index fell). In February, the MCNews 12 Index firms got back in the race, as the Index erased nearly half of its January loss.

Still, the Index remains below its starting point of 1,000, as it has been since August 2008. In spite of that, there's underlying strength in the MCNews 12 companies. If you removed Satyam Computer Services from the Index, the recalculated MCNews 12 Index would easily rise above 1,000.

For Satyam executives, the challenge over the past year was to reorganize the company and rebuild client trust in the wake of a crippling financial scandal. The company appears to be on the path to recovery. Executives announced plans to hire 4,000 more people in the next three months, and its financial condition is improving. The company has a manageable level of debt, and the stock is trading below book value.

Though unsettling economic news will likely continue to whipsaw the market, you can find positive indicators. The Conference Board Measure of CEO Confidence struck a note of optimism--it was 64 after the fourth quarter of 2009, up from 63 in the previous quarter.

British consumers grew a bit more upbeat in February, taking the GfK NOP Consumer Confidence Index higher by three points. And, according to the Australian Bureau of Statistics, the Australian unemployment rate was at 5.3 percent in January. That reflects the largest rise in the number of people employed in Australia since December 2006.

Of course, there's bleak news too. The Conference Board Consumer Confidence Index, which had increased in January, declined sharply in February. The Index now stands at 46.0, down from 56.5 in January. The baseline for this Index was set at 100 in 1985; the February reading is its lowest point in 27 years.

Even in Australia, where unemployment appears to be stabilizing, consumers are wary. The Westpac–Melbourne Institute's Consumer Sentiment Index fell by 2.6 percent in February.

Don't be surprised if fluctuation continues in the MCNews 12 Index as investors decide how to process the mixed signals the market is sending. But, according to a study by Robert W. Baird & Co. (see article below), consultants are optimistic about the future.

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.