Logica suffers 11 per cent profit fall

22 February 2012

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22 February 2012 | Adam Leach

IT services businesses Logica reported an 11 per cent drop in profit to £247 million last year, as restructuring and contract costs ate into a 3 per cent overall rise in revenue.

The firm admitted 2011 had been “more difficult than expected” but drew strength from contract wins and a rise in activity in its outsourcing business. For the year, across its global operations, outsourcing orders increased by 23 per cent, revenues rose by nine per cent and it won significant contracts from BAE Systems and the Serious Fraud Office.

Andy Green, CEO of Logica, said: “2011 was a more difficult year than we had expected. While our order book at £4.6 billion was strong and revenue was up 3 per cent, restructuring and contract charges resulted in a lower adjusted operating profit.

He added that the outlook for revenue in 2012 “remains uncertain”, but expected the “outsourcing business to be strongly competitive”.

The company’s annual results revealed the business expects to generate savings of £25 to £35 million during the second half of 2012 as a result of “a large number of people leaving the business” and a reduction of facilities in its Benelux and Swedish operations. In December, the company announced that it was cutting 1,300 jobs.

While reducing its workforce in Europe, the company increased the number of people it employs globally in 2011 and shifted focus towards low-cost regions. It reported the number of workers in nearshore and offshore locations increased from 5,800 to 7,100, 17 per cent of its overall workforce. The company also said it planned to “increase the use of offshore labour”, having opened a second site in Bangalore, India last year and recruited close to 1,000 employees in the Philippines.

 

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