LogicaCMG stays on the right track

Analysts are encouraged by LogicaCMG's half-year figures, as the company takes on new outsourcing contracts

Outsourcing and mobile technology specialist LogicaCMG said its performance during the first half of this year was "well ahead of last year", in a statement released on Wednesday.

The company highlighted strong growth in the IT services market which it said "remains strong", and in particular pointed to success in winning outsourcing contracts in Europe. It recently signed a Memorandum of Understanding with ING covering applications management outsourcing, development and testing, and it signed a €70m, five-year contract with InBev, one of the world's largest beer suppliers.

Along with large contracts, the company said it was seeing strong demand for shorter-term consulting and project assignments, particularly in the UK and the Netherlands.

But one area not doing so well was the UK, where the company saw first-half revenue slightly down on last year, because of "the lower level of pass-through materials revenue in the first half". However, the company said that UK public sector revenue was stable, as it had recorded its first revenue under an £80m Defence Medical Information Capability Programme contract with the Ministry of Defence.

"We'd highlight just a few key messages that fit with what rivals are saying," said Ovum analyst Douglas Hayward in a statement commenting on the announcement. "Continuing strong demand for shorter-term consulting and systems integration, tightening labour market conditions, recruitment both offshore and onshore (no doubt balanced by job cuts, too), and financial services still leading the private-sector recovery."

Hayward believes Ovum's figures point to "continued — if modest — recovery in European IT services", with customers "increasingly receptive to innovative IT propositions".