Logica branches out

Outsourcer LogicaCMG saw revenue rise 39 per cent to £1.2bn in the first half of this year, driven by strong growth in the financial and telecoms sectors.

Financial services and telecoms rose 24 and 22 per cent respectively, while public sector business grew just three per cent, and energy and utilities fell a huge 42 per cent.

Ovum analyst Douglas Hayward says these growth areas show the vendor is starting to revive its fortunes in markets in which it has previously struggled.

‘LogicaCMG rather lost its way in these two sectors, where it should be much stronger, and it has a way to go before it has significant scale in either,’ he said.

‘It saw growth in the public sector grind to a halt and it has played down investor’s expectations of UK public sector growth for some time. The public sector is now a fairly unexciting affair outside of the mega-deals.’

Hayward says LogicaCMG is underperforming in project services and there are indications it is rethinking its consulting and system integration plans.

‘LogicaCMG UK is doing well to defend its profitability while losing a little market share,’ he said. ‘Customers like a steady and profitable supplier, so LogicaCMG is not in trouble as such.’

But Hayward questions where the growth will come from, as the company has now entered a post-downturn world where being heavy or overweight in the public sector is no longer an unqualified bonus.

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Further reading

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Banking firms use outsourcing for cost savings