Monday, 10 August 2009

Logica Update

(By Anthony Miller – Monday 10th August 2009 9:30am). Saying “some of the things I had expected this year hadn’t quite come true”, Logica CEO Andy Green conveyed both disappointment and perhaps an element of surprise at missing his ‘flat’ 1H09 revenue target. But he put the focus in the right place, i.e. on the margin, which did remain flat, as guided. “We are where we should be,” and net-net he’s probably right.

I spoke to UK sales head, Garrick Fraser, afterwards and he went some way to allaying my concerns on Logica’s seeming lack of momentum in offshore delivery (see Logica's UK margin challenge), at least from the UK perspective. “We are not taking our foot off the pedal”. Good. Indeed they intend to push UK offshore mix beyond the 25% target they have already crossed, and gave the example of a five-year application management deal at BAA, announced in February 2008, where they have already reached 70%. Given Logica UK’s 60%+ revenue exposure to the Public Sector, we wouldn’t expect them to reach 70% offshore mix across the business, but why not, say, 40%?

By the way, you might be interested in the ‘compare and contrast’ between Logica and European peers Atos Origin and Capgemini, both of whom reported their 1H09 results in the past couple of weeks. As you see in the table below, the UK turned up trumps for all players, both in like-for-like (LFL) revenue growth and also ‘adjusted’ operating margin (AOM). Shame about Benelux though – the ‘joys’ of a T&M marketplace!

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