Aarti Shah 05 Aug 2014 // 6:02AM GMT
LONDON — Bite, still recovering from management turmoil in the US, will see its Asia-Pacific business passed to sister tech firm Text100, Next 15 CEO Tim Dyson announced today as part of a trading update.
The combined entity will be a 300-person, $21 million operation across Asia-Pac, making up about 13% of Next 15’s overall revenues.
“Where we need to focus our efforts is strengthening our business in mainland Europe and Asia-Pacific,” Dyson told the Holmes Report. “Having two businesses in Asia-Pac meant it would take a lot longer to make the right investments to do that. So we’ve made the decision to integrate Bite under Text100.”
The move frees Bite from having to compete on a global basis while the firm looks to stabilize after several years of tumult. Bite will now concentrate on refining its digital chops — in particular around insight, content and marketing technology — rather than on achieving geographic scale.
The consolidation merges Bite’s eight offices across Asia-Pac — located in Bangalore, Beijing, Hong Kong, Mumbai, New Delhi, Shanghai, Singapore and Sydney — under Text100, making the latter Next 15’s sole brand in the region. Text100 already maintains parallel operations in all of these markets, along with additional offices in Kuala Lumpur and Chennai.
The move does not impact Bite’s operations in the US and UK. In continental Europe, however, Bite France will continue to report into Bite UK, meanwhile its Swedish operation will move under Text100. Bite is currently “in discussion” with its troubled German office on next steps.
During the six-month integration, Bite EVP Paul Mottram and Text’s regional director Anne Costello will co-lead with plans to ultimately consolidate the new entity under one regional head reporting to Text100 CEO Aedhmar Hynes. She expects, however, to retain more client-facing senior talent as part of the merger.
“We have managing consultants and senior consultants that run on parallel career paths,” Hynes said. “It allows us to ensure our most senior people don’t get wrapped up in a P&L.”
Meanwhile, Bite’s Asia-Pac president David Ketchum stepped down on July 31 following his earnout from the Upstream acquisition. Whether he remains with Next 15 is yet to be finalized, Dyson said.
“We don’t see this as a move to make radical cost savings,” Dyson noted, adding the integration will result in backend efficiencies via shared administrative resources. He did not provide specific numbers on potential headcount reductions.
Before the merger, about 30% of Text100’s overall revenue — about $15 million — came from Asia-Pac via clients that include Blackberry, Cisco, IBM, Lenovo and VMware. Meanwhile, Bite entered the market through its acquisition of Upstream in 2009. Asia-Pac was once considered to be one of Bite’s more robust markets. At the time of the merger, it was taking in about $6 million with 80 people across the region.
The primary client conflict would have been former Bite client HTC, but Dyson said “there is now very little overlap” among conflicting clients across the two firms. As part of the merger, Text100 will continue to look to expand beyond the tech sector.
“There are expected to be some one-off costs associated with this decision but it should result in a stronger, more profitable set of operations in these markets,” Dyson said in the trading statement. “The company will be in a position to report in more detail on the impact for the group at its next report to shareholders in October.”
Also as part of the trading report, Dyson also reported for the first time in the Next 15 history, management expects revenues for the 12 months to July 2014 to have exceeded £100m, primarily driven by strong US growth and improvements in the UK.