VAR bags Outsourcery £1.1m mega deal

But TechMarketView rains on firm's parade and insists margin is key

A "key channel partner" of Outsourcery has won the firm a "significant" £1.1m contract with one of the UK's biggest companies.

The Microsoft cloud partner announced the deal with the FTSE 100 end user to the stock market this morning, but did not name the customer or the partner involved in the deal.

Over a three-year period, the lucrative contract will generate more than £30,000 a month in recurring revenue.

Outsourcery and its partner will provide the customer with Microsoft Lync services and plan to migrate users from a traditional phone system to enterprise voice services. Upon completion, nearly 50,000 individual end users across three FTSE 100 firms will run on Outsourcery services, it said.

Outsourcery's chief executive Piers Linney (pictured) said he was proud of the deal.

"We are experiencing a growing pipeline, helped by our channel partners actively selling our portfolio of cloud services to meet demand from their customers," he said. "I am proud that we can now count three of Britain's largest public companies as end customers and look forward to working with our partners to add to that number as we prove our capabilities and extend our market leadership position."

But analyst TechMarketView (TMV) said the deal is not as significant as it may first seem.

"It may seem churlish of me to take the shine off today's contract announcement [from] Outsourcery, but I feel some context is required," said TMV managing partner Anthony Miller on the analyst's HotViews blog.

"The three-year deal with a FTSE 100 company – sold through a channel partner – is 'expected' to generate total revenues of £1.1m. At the company's half-year run rate this represents about five per cent of annualised headline revenues, assuming all the contract revenue accrues to Outsourcery. Significant indeed," he said.

"However, Outsourcery's revenue run rate is also about the same as its operating loss rate – it loses £1 in operating profit (a tad more, actually) for every £1 of revenue that it generates. What would have made today's announcement so much more uplifting is if management had also said that the deal is margin-enhancing. If so, then it really is welcome news."