Logica to axe 1,300 staff

IT services company Logica will be cutting its workforce by more than 1,300 people as a result of a profit warning sparked by the poor performance of European markets.

Logica, which supplies IT services to the UK government, is restructuring in order to battle a short-term downturn in client spending brought about by economic uncertainty, the company said on Wednesday.

"It has recently become clear that many of our clients are delaying short term expenditure and reducing discretionary investments to weather an uncertain economic future," Logica said in a statement.

"As a result, the pockets of weakness that we first saw in September have widened through the quarter," the company added.

The job cuts will take place across Sweden, the Netherlands, Denmark and the UK, Logica said. In total around 450 jobs will be lost across the UK and Sweden.

The company estimates that the restructuring will cost around £93m in one-off charges and an extra £39m charge in contract renegotiations.

However, it said that by cutting staff and restructuring the company — including "exiting more than half of the property we currently occupy" — that it will save between £50m and £60m per year by 2013. Logica expects to see a saving of at least £25m by the second half of 2012, it said.

"We deeply regret the impact job losses will have on the people affected in many of our businesses. But we are confident that it is best for our clients, people and shareholders that we face squarely into the difficult economic conditions ahead," Andy Green, chief executive at Logica, said.

On Tuesday, Logica was awarded a framework agreement for human resources (HR) and finance services by the government. The value of the deal was not disclosed.