Logica have just announced their first half year results and they are better than expected. However, Logica has stated that with the uncertainty still lingering in this sector, it is “key” to manage contractor levels. In fact, the company confirmed that they had cut their contractor levels by 20% across all of their major markets in the second half of last year. They also confirmed that they negotiated “significant rate reductions” with their suppliers as part of their planned savings of £110m.
Logica are not currently planning any further redundancies than the 190 which they have already announced but their staff salaries will be frozen throughout 2009.
Their UK market was the only site to announce a sales growth over the past six months. Logica stated that streamlining their services over this period saved them £30 million. This proved most beneficial within the UK.
TechMarketView analyst, Anthony Miller, commented: “The UK improvement was mainly due to property rationalisation and lay-offs, which raises the question as to what Logica has to do to push UK margins further. I do wonder whether Logica is pushing blended delivery hard enough, especially in the UK. Sure, the UK is public sector heavy, but other players have shown this work does not all have to be onshore. With half its UK business coming from outsourcing, there should be a bigger opportunity for Logica to move more work offshore – and I struggle to see how else Logica could protect let alone expand margins otherwise.”
Speaking to the Financial Times, Logica chief executive Andy Green said that as “uncertainty remains in the consulting and professional services market” they are expecting their full-year sales to fall by around 2 per cent.