Segment Information

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segment Information

13.Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance.

The Company provides information technology and related services to its clients. These services include digital IT solutions and services, and staffing services. With digital IT Solutions and Services, the Company generally takes responsibility for the deliverables and some level of project and staff management, and these services may include high-end advisory or business-related consulting. When providing staffing services, including managed staffing, staff augmentation, and volume staffing, personnel are provided to clients based upon their requirements for specific skills, who then, in turn, take their direction from clients’ managers.

The Company’s strategy throughout its operations is to expand the amount of IT solutions and services it provides to its clients as compared with staffing services, and to focus on delivering digital solutions. IT solutions and services provide significant value to the Company's clients, and drive higher bill rates and margins for the Company. Existing solutions include business, technology, and operations solutions that aid the Company's clients in digitally transforming their company, and ultimately meet the needs of its clients. The digital services the Company delivers includes the Internet of Things, Intelligent Automation, Data and Analytics, and Cloud and Automated Testing.

The Company's strategy is to focus on providing digital services within its IT Solutions business in both North America and in Europe. As part of this strategy, the Company also determined that there are certain lower margin staffing accounts within its business that are no longer part of the Company’s long-term business plan. The focus includes investing in business development, solutions, delivery, and marketing for IT Solutions. Additionally, the Company is critically evaluating each significant staffing engagement as it comes up for renewal to determine if the Company would continue to provide those services to its clients. These decisions are based on, among other factors, evaluating the work performed, the availability of the resources, the client, the long-term opportunities for the services provided at the client, and the revenue and profit associated with the engagement.

Accordingly, the Company reports its operations in three segments within its business: North America IT Solutions and Services, Europe IT Solutions and Services, and Non-Strategic Technology Services.

The segments are composed of the following:

IT Solutions and Services in North America and Europe

IT Solutions and Services include business, technology, and operations solutions that aid the Company's clients in digitally transforming their company, and ultimately meet the needs of its clients. The digital services the Company delivers include the Internet of Things, Intelligent Automation, Data and Analytics, Cloud and Automated Testing.

Non-Strategic Technology Services

The Company’s Non-Strategic Technology Services address a range of information and technology resource needs, from filling specific talent gaps to managing high-volume staffing programs. The Company recruits, retains, and manages IT talent for its clients, which are primarily large technology service providers and other companies with multiple locations and a significant need for high-volume professional IT resources. This segment consists of the lowest margin services the Company provides to its clients. This segment consists primarily of staffing services in North America, and a minor amount (less than 5% of revenue in this segment) of such services in Europe.

The Company makes decisions related to resource allocation based upon the contribution income of each of its segments. Contribution profit reflects gross profit less any expenses directly related to each respective segment. Those expenses primarily include sales, solutions, delivery, and recruiting expenses. General and administrative expenses are not allocated to the individual segments and primarily include corporate support costs such as finance and accounting, internal IT, human resources, benefits and marketing.

The operating results for the Company’s segments for the quarters ended March 31, 2023 and April 1, 2022 were as follows:

Quarter Ended March 31, 2023	North America IT		Europe IT		Non-Strategic
(amounts in thousands)	Solutions & Services		Solutions & Services		Technology Services		Total
Revenue	$	23,196	$	40,093	$	14,913
Direct costs		14,212		30,769		13,086
Gross profit		8,984		9,324		1,827
Sales, solutions, delivery, and recruiting expenses		4,797		5,052		363
Contribution profit	$	4,187	$	4,272	$	1,464		9,923
General and administrative expenses								9,216
Operating income							$	707

Quarter Ended April 1, 2022	North America IT		Europe IT		Non-Strategic
(amounts in thousands)	Solutions & Services		Solutions & Services		Technology Services		Total
Revenue	$	20,435	$	42,478	$	26,504
Direct costs		13,573		31,998		23,251
Gross profit		6,862		10,480		3,253
Sales, solutions, delivery, and recruiting expenses		3,130		5,229		810
Contribution profit	$	3,732	$	5,251	$	2,443		11,426
General and administrative expenses								8,227
Operating income							$	3,199

Depreciation allocated to Europe IT Solutions and Services totaled $0.2 million in both of the quarters ended March 31, 2023 and April 1, 2022. Depreciation allocated to North America IT Solutions and Services totaled $0.1 million in both of the quarters ended March 31, 2023 and April 1, 2022. Depreciation allocated to Non-Strategic Technology Services totaled less than $0.1 million in both of the quarters ended March 31, 2023 and April 1, 2022.

The Company has not provided any other expense or asset information for each of its segments as the Company’s CEO, who is the chief operating decision maker, does not use this information in any way to make resource decisions or to manage the segments. The Company does not prepare balance sheet or statement of cash flow information for its segments.

The Company's goodwill by segment at March 31, 2023 and December 31, 2022 was as follows:

(amounts in thousands)	March 31, 2023		December 31, 2022
North America IT Solutions and Services	$	18,673	$	18,753
Europe IT Solutions and Services		17,556		17,245
Total goodwill	$	36,229	$	35,998