Logica UK outsourcing orders plummet 80%

Logica saw orders in the UK plummet by 80% to £101m compared to last year, the outsourcing company reported in first quarter results

Logica saw orders in the UK plummet 80% to £101m compared to last year, the outsourcing company reported in first quarter results.

Overall Logica’s sales remained flat for the first three months of its financial year at £974m, with worldwide orders dropping 24% to £1.05bn.

The low orders indicate a weak sales pipeline for the outsourcer, which could see a big drop in its annual sales next year.

Logica said its low UK orders were due to it having won two mega deals with the Serious Organised Crime Agency (SOCA) and Shell last year. Excluding these orders, the underlying order performance was 5% down on last year, it claimed.

But Anthony Miller, co-founder of analyst firm TechMarketView, says the news indicated a difficult year ahead for the company. The lack of big deals in the public sector hit Logica hard, as half its UK business is with government, he said.

“I see this as an even tougher marketplace for the outsourcing industry than last year. Perhaps even more so from Logica, as to win smaller deals it has to be more price competitive.”

“Logica is behind its peers in the number of low-cost workers it has on offshore locations and its ability to be able to deliver on time and make its margins,” he added.

Andy Green, CEO of Logica, said:  “This is a solid performance underpinning our full-year guidance. We have made good progress with clients in delivering against current contracts as well as winning and implementing new business. Our restructuring actions are fully on track and will help drive improvement in profitability in the second half.”

The news follows results from French outsourcing company Capgemini, which reported a sales increase of 4.3% in its first quarter results.

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