Restructure at Logica results in 1,300 job losses

Logica, the IT services firm, has announced it is to shed 1,300 European back-office jobs with 500 expected in the UK.

The job losses are part of a £110 million restructuring programme under which it will increase its headcount in India, the Philippines and Morocco. It will also hire more consultants and will enable it to exceed market growth in 2009.

Logica’s chief executive, Andy Green, said he is confident that the plan will allow the company to outperform the market and revitalise Logica, delivering sustained value for shareholders, customers and employees.

Mr Green, who was appointed last autumn, added that the company would meet an earlier forecast of 3% revenue growth in 2008, below the rest of the market, but he hoped next year would be much higher.

2008 is a year of consolidation, this takes time. We are a couple of points below the market this year, we will be a couple of points above next year, added Mr Green.

Shares in the company were down 5% percent at 108.75 pence this morning, valuing the company at approximately £1.6 billion.

George O’Connor, an analyst at Panmure Gordon, said the shares had increased ahead of the announcement and that he did not think Andy Green had done enough.

He’s trying to make an existing structure better, rather than addressing a fundamental shift in the market, added Mr O‘Connor.

However, in contrast, Landsbanki analyst Michael Donnelly was more optimistic, and said we are pleased with the focus on offshoring and outsourcing and believe that the magnitude of the proposed savings points more to significant previous mismanagement of the cost base than over-optimism.

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