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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
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.