25 July 2005 Electronics retailer Dixons has abandoned an outsourcing deal with LogicaCMG, after the two companies failed to reach agreement on the terms of the contract.

The deal was intended to form part of a £30 million company-wide cost cutting programme, but the sheer complexity of the detailed contractual arrangements has forced a rethink from Dixons.

“We can confirm that we have ceased negotiations with LogicaCMG regarding the potential outsourcing of our internally facing IS support function. We have been unable to agree terms,” said Dixons in a statement.

Dixons has been under pressure to reduce costs amid a slow down in consumer spending. It has recently closed 100 high street stores across the UK and reported a fall in revenues.

The outsourcing deal would have affected over 200 of Dixon’s IT staff, and a small number of these jobs had been expected to transfer to India.

Dixons also revealed that its CIO Iain Andrew has left the company. Andrew had previously negotiated a seven-year outsourcing deal with LogicaCMG when he was the IT director at Britannia Airways. It is not clear whether his departure from Dixons is related to the failed negotiations.

Dixons has not said whether it will look for alternative outsourcing partners.