Logica cuts 500 UK jobs

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In a bid to "revitalise" its business, IT services group Logica has revealed a £110 million restructuring plan that will see up to 1,300 job losses.

Logica hopes to improve returns to shareholders by cutting down its workforce by three per cent in non-billable areas such as human resources. At least 500 jobs in the UK will be affected with the rest being in mainland Europe.

Meanwhile, Logica will almost double its offshore headcount from 3,450 to 8,000. Most offshore expansion is likely to take place in India, Morocco, the Philippines and Central and Eastern Europe, in an attempt to take advantage of lower wages.

The number of consultants employed by the company will also increase from 2,500 to 3,500 by 2010.

In his business review of the company, Andy Green, chief executive of Logica, said that the cost-cutting drive was a means to stimulate growth and that the overhaul would cost £110 million to implement over the next two years, resulting in £80 million of cost savings from 2010.

"We will be increasing our investment in growing the Logica business, funded by a cost-cutting programme that will reduce overheads.

"I am confident that this plan will allow us to out-perform the market and revitalise Logica, delivering sustained value for shareholders, customers and employees alike."

Logica's restructuring plan follows several acquisitions, including French reseller Unilog in 2005 and the Nordic IT services company WM-data in 2006, which has seen Logica's workforce double to just under 40,000 people.

A spokesperson for Logica said that Green's announcement is a means to streamline the company. "We've had people say that the restructuring plans are very welcome," the spokesperson said.

"Since the acquisitions, this move has been expected. Generally people are happy about the restructuring because it needed to happen," the spokesperson said.

However, according to media reports, Green's announcement did not signify good news to all, as shares for Logica fell by three per cent to 111p.

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