Logica, Capgemini signal gloomy first-half

(By Anthony Miller – Thursday 30th April 2009 7:30am). Though both Logica and Capgemini reported Q1 revenues pretty much flat yoy on a like-for-like basis, they also signalled deteriorating market conditions that would see first-half revenues show a slight decline. Unlike Cap, Logica also ventured to take a peek at the rest of the year, expecting second-half revenues in line with first-half, and full-year margins (less nasty bits) at least flat yoy. Cap expects no more than a 1% drop in H1 margins.

The ‘compare and contrast’ on a geographical basis shows quite significant differences between the two players (all percentages like-for-like). In the UK, Logica grew revenues 4% to £182m but clearly lost share to Cap, with 7% growth to €456m (say £415m). Logica also lost share to Cap in the Benelux region (which in Logica’s case curiously excludes the ‘Lux’ bit leaving, I guess, just ‘Bene’), with revenues slumping 11% vs less than 1% decline for Cap. Logica has been giving Bene a lot of therapy recently to manage down the cost base, chopping out contractors and announcing 300 employees are to lose their jobs. The Netherlands has a much higher skew towards time-and-materials work than the UK. Logica outgrew Cap in France (+2% vs -1%) but not in Germany (-8% vs -2%).

But both companies were in lock-step on where the growth was coming from – outsourcing – much more so for Logica (+9%) than Cap (+1%), though Cap did better in the other service lines (-1%) than Logica (-4%). Logica added just 150 to its ‘offshore and nearshore’ headcount since the end of the year – now 5,150. They will ‘prioritise’ offshore recruitment as onshore recruitment declines. That makes the 8,000 headcount target CEO Andy Green set last year look a little challenging now. Cap also appeared to add about 150 heads offshore (Asia/Pac) but their tally stands at 22,200.

Anyway, there’s a heap of data to sift through and a couple of concalls to listen to, so I hope to bring you an update late today.