Schlumberger Puts the Final Bullet in Convergent Group

Two years after acquiring Convergent Group and using it to build SchlumbergerSema's new utility practice, Schlumberger this week laid off more than half of the roughly 100 remaining staff in this organization. The layoffs included executive management and sales resources, with the remaining resources being those focused on delivering existing utility industry projects.
After two years of market share decline and lack of investment, we view this as a signal of Schlumberger's exit from the utility distribution IT market. Recent research has shown that energy utility IT spending on consulting and systems integration services has declined at a faster rate than the decline in overall IT spending, causing a tight market for IT service providers. Schlumberger's main competitor in this market (Kema) will benefit from this move as it picks up additional uncontested business. We expect Schlumberger to remain focused on automated meter reading solutions for utilities.
Bottom Line: Energy utility users considering Schlumberger for IT service work in distribution should remove it from consideration. Existing Schlumberger customers in this area should review contracts and update risk mitigation plans for any ongoing projects.
Rick Nicholson
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- Energy Information Strategies