Defence and security company BAE Systems has awarded a six-year HR outsourcing contract to Anglo-Dutch IT services giant, Logica.

Logica takes the contract from troubled British BPO company Xchanging. BAE Systems chose not to renew its £18 million contract with Xchanging in November last year.

The company will use Oracle’s human capital management (PeopleSoft) and its payroll software (E-Business Suite) to "design, build and run a transformed HR service for BAE Systems", the outsourcer said in a statement.

The deal comes after Logica cut 1,300 jobs in December, warning of missed profit forecasts and responding to delayed spending from clients. With today’s BAE deal, Logica claims to be one of the "fastest growing providers of next generation HR services in the market", building on a similar HRO contract win with international retailer Ahold six months ago.

Commenting on the deal, Anthony Miller of TechMarketView wrote that he assumes that the Logica deal will be on better terms than the Xchanging, which was worth £18 million a year, and generating a 5% margin.

"While it’s great to see Logica winning multi-million pound, long-term outsourcing contracts, we’re not exactly clear how a 5% deal will help Andy Green restore group margins in the medium term," Miller wrote