IT spending cuts hamper Logica revenues
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Anglo-Dutch IT services provider experiences slight dip in annual revenues, forecasts flat sales for 2010 as economy ambles to recovery
IT services supplier Logica has posted a 3% fall in annual revenues to £3.7 billion, as its clients held off spending on major IT projects.
Net income at the Anglo-Dutch firm stood at £40.1 million, up from £38.9 million in 2008, thanks in part to 9% revenue growth in the firm's outsourcing unit on the back of cost-cutting drives among customers. It anticipates that its sales growth in 2010 will remain largely flat.
IT consulting revenues dropped 10% for the year, while sales to financial services slumped by 20%. Logica also incurred costs of £95 million as it trimmed back staff numbers, but stated that it does not expect to have to pay any restructuring costs in the coming year.
Logica has been spared even greater losses by relative steady business in the public sector, but the company admitted that this could dry-up after the UK's general election later this year.
"In the short term there could be a hiatus [in public sector spending], but in the medium term all European countries will need to invest in automation to get spending down," said Andy Green, chief executive, speaking to the Financial Times. "For most of our clients, life hasn't returned to the sunny uplands of 2006 and 2007. There will be slow improvements."
A report published by TechMarketView this week forecast that public sector IT spending will fall this year, regardless of which party wins the coming general election.
