Logica/CMG merger will drive IT services consolidation

The planned merger between Logica and CMG, announced yesterday, is certain to increase the pressures towards consolidation in the...

The planned merger between Logica and CMG, announced yesterday, is certain to increase the pressures towards consolidation in the IT services market, according to analysts.

"This is not an acquisition or a merger aimed at expanding their service portfolio but rather at consolidating their position," said Jamie Snowdon, an analyst at market researcher IDC.

The merged companies would make up one of Europe's largest publicly traded IT service organisations in an economic environment where size matters.

"In uncertain times, enterprises want to work with a firm they see as more secure and more stable," said Ned May, another IDC analyst. "There is a shift away from some of the smaller players."

Georgina O'Toole, analyst at Ovum Holway, agreed. "In today's market, IT services companies must be either big or niche to survive," she said.

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