Is Fujitsu's predicted decline out of line with market?

Fujitsu has announced that it is cutting 1,200 UK jobs, equivalent to 10% of its UK workforce, reports Ovum.

Fujitsu predicts a decline in revenue of 7% in the UK for the full-year 2010. This compares with growth of 4% to £1.65 billion in FY09.

Ovum adds:

“…We remain convinced that Fujitsu’s position is not symptomatic of a broader decline at the top end of the UK IT services market. Recent good progress from other major players such as IBM (£265 million – National Identity Scheme), HP/EDS (£1 billion – Aviva), Capgemini (12.7% growth in 1H09) and CSC (£385 million – National Identity Scheme) show that there is still life in the market for big deals in both the public and commercial sectors…

“Fujitsu has undoubtedly had a run of bad form in the UK over the past12 months, notably in its key market the UK public sector. And wesuspect this will have been a factor in its decision to make cutbacks.

“Firstly,in May 2008 the company’s £896 million contract with the NationalProgramme for IT (NPfIT) was terminated following failed contractrenegotiations with managing body Connecting for Health (CfH).

“Secondly,Fujitsu put a lot of time and investment into its bid for a role in thegovernment’s National Identity Scheme, for which it was shortlisted asone of three potential suppliers to upgrade the application andenrolment system for new biometric passports. This was seen as thenumber one target within Fujitsu’s central government division, so theeventual award of the contract to CSC in mid-2009 will have been amajor blow.

“Both the NHS termination and the NIS loss willhave badly dented Fujitsu’s revenue and profit expectations for 2009,as well as its forward pipeline of business into 2010…”

Fujitsu succumbs to big staff cuts – Ovum website