Approximately 91%, 90% and 89% of our revenues for fiscal years 2003, 2002 and 2001, respectively, were recurring. We
define recurring revenues as revenues derived from services that are used by our clients each year in connection with their
ongoing businesses, and accordingly, exclude conversion and deconversion fees, software license fees, short term contract
programming engagements, product installation fees, and hardware sales.
Our five largest clients accounted for approximately 13%, 14% and 18% of our fiscal years 2003, 2002 and 2001 revenues,
respectively. Our largest client represents 4% of our consolidated revenues. In addition, over 99% of our consolidated revenues
are derived from domestic clients.
The markets for our services are intensely competitive and highly fragmented. The most significant competitive factors are the
reliability and quality of services, technical competence and the price of services.
We compete in the state and local market by offering a full range of outsourcing services and by leveraging our subject matter
expertise, technical skills and infrastructure to achieve economies of scale. Competition in the state and local market is
fragmented by line of services and we are a leading provider in these areas. Competition for our state healthcare services and
municipal services is primarily Electronic Data Systems Corporation ("EDS"). Competition for our welfare and community
services is primarily Maximus. In child and family services, our primary competitors are Bank One, Citibank, IBM and Tier
Technologies ("Tier"). Competition for our electronic toll collection services is primarily Transcore. In addition, there are
numerous local competitors that we face in our state and local segment.
We compete in the commercial market by offering technology outsourcing services that leverage our data center infrastructure,
value added business process outsourcing services which leverage our technical skills, proprietary workflow software, offshore
workforce, and economies of scale. The competition for our commercial outsourcing services include EDS, Computer Sciences
Corp. ("CSC"), IBM, Hewlett Packard, CGI, Exult, Accenture, Sourcecorp, Inc., Sallie Mae, Perot Systems and in house
departments performing the function we are seeking to outsource. We may be required to purchase technology assets from
prospective clients or to provide financial assistance to prospective clients in order to obtain their contracts. Many of our
competitors have substantially greater resources and thus, may have a greater ability to obtain client contracts where sizable asset
purchases or investments are required. To maintain competitive prices, we operate with low overhead and maintain a significant
client base and account/transaction base to achieve sufficient economies of scale. The competition for our commercial business
process outsourcing services is most often clients in house departments currently performing the function that they are seeking
In the federal government market, we actively compete with small specialized firms as well as with large competitors with a
wider range of systems integration services. We believe that the key competitive factors in obtaining and retaining clients
include the ability to understand project requirements, deliver appropriate skill sets in a timely manner and price services
effectively. We must also compete for qualified personnel through competitive wages and by maintaining a consistent demand
for the skills recruited. Our competition in the federal government market includes EDS, CSC, Science Applications
International Corporation, Lockheed Martin, Anteon International Corporation, CACI International Inc. and numerous other
In the future, competition could continue to emerge from large computer hardware providers as they shift their business
strategy from hardware to both services and hardware. Competition could also emerge from European service providers
seeking to expand into North America, and from large consulting companies seeking operations outsourcing opportunities.
We are also beginning to see the convergence of technology outsourcing and business process outsourcing. We believe that
vendors such as ourselves who have the infrastructure and capabilities to provide both services will benefit the greatest from
this emerging trend.