Services Firm Revamps

ORLANDO (03/10/2000) - Mastech Corp., a $470 million services firm in Oakdale, Pa., restructured this week, dividing itself into nine independent firms devoted to different areas of Internet services.

The holding company, iGate Capital, will own a majority stake in the companies, which it plans to take public this year.

Analysts said the move is typical among services firms that hope to claim their stake in the growing electronic services space and lure top talent with stock options.

Firms under the iGate umbrella include Web integration company Emplify Consulting and Symphoni Interactive LLC, which provides Web application development.

The strategy should also help the companies recruit senior-level talent by offering shares in a firm before its initial public offering, said iGate CEO Sunil Wadhwani.

IGate has already lured executives from major computer and consulting firms, said Wadhwani.

Smaller Internet consultancies such as San Francisco-based Scient Corp. and Boston-based Viant Inc. have lured similar talent in the past, according to Albert Nekimken, an analyst at Input, a research firm in Vienna, Va. While these smaller firms may earn less than the larger players, they've amassed significant market value. Scient, for instance, had less than $21 million in revenue last year, but its market capitalization is more than $6 billion.

"Everyone wants to be a Scient or a Viant these days," said Joshua Randall, an analyst at Kennedy Information Research Group in Fitzwilliam, N.H. IGate's consultancies will compete against these companies as well as other "boutique" firms including Cambridge, Mass.-based Sapient Corp. and Atlanta-based iXL Inc., said Wadhwani.

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