Systems integrator Logica attributed a 16 per cent year-on-year increase in revenue for the first half of 2008 to healthy spending by European energy, utility and public sector customers, whose budgets do not yet appear to have been affected by the credit crunch.

But like other IT services firms, Logica faces increased competition for its clients from suppliers in emerging countries, particularly India, and is having to restructure to compete.

Logica’s net income in the first six months of the year fell to £5.2m from £149.7m in 2007, as the company undergoes extensive re-organisation designed to cut £80m per year from its operational cost structure and present better value to customers.

Last April the company axed 1,300 European jobs, including 500 in the UK, simultaneously announcing its intention to increase offshore staff numbers in Morocco, the Philippines and Bangalore to 8,000 by the end of 2008.

The publication of Logica’s results coincided with a fresh prediction from analyst Gartner, suggesting Indian systems integrators and IT services companies will soon eclipse established European rivals in terms of revenue, market capitalisation and customer numbers.

“With the less expensive and larger workforce available in India, the India-3 providers [Tata Consultancy Services, Infosys Technologies and Wipro Technologies] were able to create the combination of low-cost, high-quality services,” said Partha Iyengar, Gartner vice president and regional director in a research note.