Uncertain European economy begins to bite outsourcers

News that Logica is cutting 1300 jobs could be a sign of things to come as businesses in Europe hold back spending in the light of the Euro crisis and increasing fears of a return to recession.

The cuts include 450 positions in Sweden and the UK and a 550 jobs are expected to go in the Netherlands and Belgium due to the lower demand for IT contracts in these regions.
“…it has recently become clear that many of our clients are delaying short term expenditure and reducing discretionary investments to weather an uncertain economic future,” said Logica.

Peter Brudenall, lawyer at Lawrence Graham, says some of the suppliers in continental Europe might become easy targets for the big Indian suppliers, who are trying to increase their European presence.

“Indian IT majors to look at acquisitions in Europe, with the exception of the UK. Companies in continental Europe might start to look quite inexpensive and there is certainly a perception that there is more growth in countries like Germany, France and across Scandinavia.”

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