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Taking the world view

Consultants File 2004 Introduction

With an acquisition under its belt and two new international offices, Scottish consultant Babtie has seen its international turnover swell by well over 60%.

Babtie, a consulting firm based in Glasgow, UK, is generally thought of as a Scottish operation.

It has a profile south of the border, but a low one - Babtie's extensive portfolio of civil, structural and power engineering services is something of an unguarded secret. So its pretensions to a significant international standing come rather as a surprise.

From a low base, Babtie's overseas results have been remarkable, and the firm has prospered by concentrating on emerging markets.

'We are making up for lost time, ' says chief executive Bill Mitchell. 'Three years ago, overseas work accounted for just 3.5% of Babtie's turnover, but now that figure stands at 14% to 15%. I don't expect income from our overseas operations to increase much in proportion to earnings from Babtie's UK business, but I do expect it to keep pace with growth. Income surged by a third last year and we're on track for 25% growth this year.' Mitchell predicts gross group income will be around US$290M this financial year.

Growth is being delivered by an expanding network of international offices. In the last three months Babtie has opened a Gulf office in Abu Dhabi and a base in Shanghai, mainland China.

The decision to establish a permanent presence in Abu Dhabi follows years of joint venture working and office sharing with local firms of architects and engineers. 'We've secured a major residential and commercial development, including a really high profile 22 storey office block, in Gulf City. It's a complex project involving us in architectural, structural and civils design work and it's going to keep us busy until 2006. It was clear we should make the move - we've plenty of other projects going on in the region, and the office gives us a springboard to increase our workload further, ' explains Mitchell.

Babtie's Shanghai office has been set up on the back of World Bank and Asian Development Bank projects, as the firm's long-established Hong Kong stronghold becomes ever more stretched. 'A lot clients we are working for through Hong Kong are focused on the Shanghai area; Shanghai is China's economic power house. We've got five expat engineers in Shanghai building up the business and we want to set up joint ventures with local design institutes. We have a five year plan to build Shanghai up into a group-significant business with a fee income in the order of US$16M per annum, ' Mitchell adds.

These two new offices fill in gaps in what is an increasingly global empire: Babtie has offices in Singapore, India, the Czech Republic and Ireland, where the company has a joint venture with EG Pettit.

Here the firm has just secured a three year framework contract with Dublin Port Authority to provide all capital works and maintenance - it should be a good earner, Mitchell enthuses.

'We have a policy of focusing on markets, not of following jobs, ' Mitchell says of Babtie's international growth strategy.

'Where we've invested, we want to consolidate, get the firms well established, and put them on a footing to grow organically.' He says there are no acquisition plans, so there will be no sudden leaps in earnings or capacity of the kind seen in 2000, when Babtie snapped up joint venture partner BMT.

Mitchell stresses that the individual culture of each business must be respected, but says that organic growth is important in establishing the Babtie culture in all its outposts. 'What we try to achieve is a business with the same support, set-up and services as our UK Babtie offices, of which we have more than 50. This way, we are able to integrate staff fully across each of our businesses. This is key, ' Mitchell says.

Senior staff from the UK make regular overseas trips to visit and work with staff in local offices. International managers spend time in the UK. And Babtie operates an exchange system, encouraging its UK and international staff to move around between offices. 'We encourage staff to travel within the company - British staff might spend a couple of years in India or China; we aim to get all our international staff over here for one to two years. It moves expertise round the firm to where it's needed. It helps everyone understand how the firm works and makes the job more interesting. And it helps turn out well rounded engineers.

'Finding the right people is imperative. We have invested our senior managers' time heavily to ensure our international businesses are well founded - it is from here that we are now reaping the reward.'

Maintaining international growth as the UK industry bemoans a stifling skills shortage is a challenge Babtie is overcoming by taking on a high proportion of local manpower.

'Our overseas offices are typically staffed by less than 10% expats, ' says Mitchell.

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