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Friday, 03/29/2019 5:51:13 PM

Friday, March 29, 2019 5:51:13 PM

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SAIC aims to stay ahead of the talent hunt as HQ2 approaches

Science Applications International Corp. said it scored its best year last year in five fiscal years, in part due to its acquisition of Engility Holdings Inc. and new federal IT contracting work.

But outgoing CEO Tony Moraco and CEO-elect Nazzic Keene said they have kept an eye toward the one scare resource they say is necessary to power any future gains: tech talent.

Amid the Reston government contractor’s growth in the IT modernization and space markets, Moraco said on SAIC’s earnings call Thursday that demand for human capital remained a key focus for the company, especially as it becomes more sought after in the Washington marketplace. Amid the federal government’s push to recruit more IT and cybersecurity professionals and the pending arrival of Amazon HQ2, concerns about a tech talent drought in the D.C. area have abounded and led to fierce competition.

“The talent piece is critical to our business, both retention and attracting,” Moraco said. “We have looked across the U.S. really to diversify the geographic component. We’ve mentioned in the past that our customers have seen that same talent challenge, and so are more open to, let’s say, a virtual workforce.”

Moraco said that SAIC has tried to navigate talent challenges by developing hubs outside of the D.C. area, such as the company’s Technology Integration Gateway in Cookeville, Tennessee, a site that opened in May 2017 with plans to employ 300 IT professionals by 2022.

“Top of mind for us is to really draw that talent in,” he said. “Mission, I think, still is a critical factor, as well as the culture of the company. I think our added scale provides a lot of career opportunities for folks to join us, but it has its challenges, and we are just going to continue to try and differentiate.”

The addition of Engility has helped to infuse more talent — especially new employees with government security clearances — into what is a broader customer base that now includes space industry contracts alongside SAIC’s diverse business operations, Moraco said.
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“Given, again, the reposition with our [security] cleared workforce, it really allows us broader base of technology experts,” he said. “That will facilitate additional growth in the cross-sell of SAIC capabilities into legacy Engility channels. It’s a broader people dimension, and our presence with a broader set of customers always facilitates opportunities for further growth.”

SAIC officials previously said when the Engility deal closed in January that the company had grown to 23,000 employees, up from 15,000 in 2017.

Keene, who is overseeing the day-to-day operations of the company as COO before officially becoming CEO on July 31, agreed that the Engility acquisition provides SAIC with a better on-ramp for talent because it allows for a wider range of operations on which to draw professionals.

“The greater the capacity, the more access [you get] to the broader talent base in particular areas,” she said.

Growth has not been a problem for SAIC in fiscal 2019, even with the costs of the Engility acquisition. The company saw a 6 percent gain, or $64 million, over its previous fourth-quarter earnings to total $1.2 billion in revenue for the quarter, in part, aided by the acquisition. SAIC closed on the Engility purchase in January, and its fourth fiscal quarter ended Feb. 1.

For the fiscal year, also ending Feb. 1, SAIC posted $205 million in revenue increases, a 5 percent gain over the prior year. The revenue was buoyed by $164 million in new contract awards for IT integration, increased supply chain portfolio orders and the Engility acquisition.

Nazzic added that the company could pursue mergers and acquisitions again to help foster more growth if it sees the proper opportunity.

“Our posture is relatively unchanged,” she said. “We will certainly look to M&A as a factor in our growth, but we are going to be very selective. It is something that will remain on the radar. We will be proactive where it makes sense, but again, we will remain pretty selective to ensure we will be doing the right deal at the right time.”



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