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DXC Opens London Facility, Boosts Efforts in Digitization

Zacks Equity Research

DXC Technology DXC recently inaugurated the DXC Innovation Centre in London to develop strong digital solutions and extend its existing digital network in the United Kingdom.

As part of this network, DXC digital technologists and enterprise solution experts will help customers modernize and integrate mainstream IT by rolling out scalable digital solutions.

The London facility will leverage DXC’s expertise in machine learning, AI, IoT, blockchain and robotics to develop solutions. This will particularly benefit government, energy and utilities, healthcare and life sciences, travel and transport, insurance, financial services and manufacturing sectors.

The center will collate the work of global teams of digital specialists on digital journey mapping and the co-creation of leading-edge prototypes. Moreover, the Innovation Centre will help develop personal and organizational digital skills and capabilities of DXC employees.

One of DXC’s key partners, PricewaterhouseCoopers, stated, “The launch of DXC’s London Innovation Centre provides PwC with a powerful extension to its own eco-system of customer experience centres and brings the ability to co-create innovative digital solutions that are rooted in the realities that come with deploying technology at scale across complex enterprise environments.”

The announcement follows DXC’s recent acquisition of a New Jersey data center from Credit Suisse, enhancing the company’s ability to help accelerate innovation for the latter’s clients.

The company already has a Digital Transformation Center in Newcastle, which is adding value to customers’ business by delivering solutions to accelerate their digital transformation journey.

Efforts in Digital Business Boost Growth

DXC is focusing on its digital business, cloud computing market and Big Data business. Clients increasingly prefer to rely on cloud-based services as it makes the IT system more agile and productive, which leads to considerable cost savings.

Gartner expects worldwide IT spending to reach $3.8 trillion in 2019, representing a 3.2% increase year over year. The growth will be mainly driven by increased spending by companies toward digitization and infrastructure buildup. In its earlier report, Gartner had indicated that major technology trends like IoT, Big Data, AI and blockchain have been driving overall IT spending. This spells good news for DXC’s prospects.

In its last reported quarter, results were mainly driven by demand strength in the company’s digital solutions. Digital revenues jumped 22% year over year at constant currency, driven by growth in enterprise and cloud applications, cloud infrastructure and digital workplace offerings. The company continued to make strategic investments in digital assets and capabilities, including increased hiring.

DXC Technology Company. Revenue (TTM)

DXC Technology Company. Revenue (TTM)

DXC Technology Company. revenue-ttm | DXC Technology Company. Quote

Notably, about 2,000 people were hired in the fiscal fourth quarter to enhance DXC’s digital capabilities. The company inked a deal with DreamWorks Animation to develop a cloud-based pipeline for digital content creation. Digital pipeline soared 50% year over year, backed by strong demand for digital solutions.

DXC continues to expand its digital transformation centers and capabilities, and build on its collaborations with partners, namely Amazon’s AMZN AWS and Microsoft MSFT Azure.

Moreover, with the Luxoft buyout, which is likely to be completed by this June end, the company expects to boost its digital business, particularly penetrating key markets of Eastern Europe with workforce expansion in the zone.

Zacks Rank & A Stock to Consider

DXC currently has a Zacks Rank #4 (Sell).

 A better-ranked stock in the broader Computer and Technology sector is j2 Global, Inc. JCOM, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for j2 is projected to be 8%.

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