Northampton-based Phoenix IT works with major IT providers such as IBM and EDS to provide network and desktop support as part of a complete package to customers. Profits have risen by 49% pa, from £1m in 1996 to £3.3m in 1999, on the back of a 52% pa sales increase in the same period, to reach £26.1m in 1999. “The main feature of the business, and its strength, is that we don’t supply end users,” says group finance director David Taylor. “Our services are sold to IT companies as part of the package they sell to the customer. So we don’t compete head-to-head in the market with the likes of IBM.” For five years Phoenix IT concentrated on building turnover at the expense of profits. But, in 1998, management decided to change tack, and, while sales have continued to climb, profit margins have now risen from 3.5% to 10%. The industry average is 6%. Taylor attributes the handsome margins to reducing sales costs and focusing effort on selling the better-paying services.
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