LIKE BT Group, the former state-owned telecoms firm, Qinetiq has struggled to shake off its public sector ethos since it was privatised in 2003. It has a remarkably impressive history; starting life as the Defence Evaluation and Research Agency (Dera), its scientists invented the liquid crystal display and carbon fibre. But a prohibitively expensive cost structure and a bloated staff have prevented it from monetising this intellectual property.
Luckily, it has another chance. Qinetiq now specialises in “network centric capabilities”, providing advice and systems that allow different national armies to work in coalition, as they do in Afghanistan. Governments are increasingly keen on fighting wars in coalition, because it means they can scale back spending on ships, fighter jets and tanks (bad news for BAE Systems). Qinetiq is well-placed to capitalise on this.
That’s why newly-installed chief Leo Quinn needs to overhaul the structure of the business, reducing headcount so that its product can start stumping up for shareholders. Hopefully his new private equity backers will help.