Logica on restructuring mode

Bangalore: Logica has said it would invest £110 million in a restructuring programme that would include about 1,300 job-cuts globally.

The move follows a business review initiated by its Chief Executive which revealed Logica’s overhead structure was high, compared with industry peers, and that it had underinvested in sales and marketing.

Majority of the job cuts would relate to Logica’s non-billable staff, which will see a reduction of about 15 per cent, the company said. In UK, it could affect 500 employees, and about 2 per cent of employees in mainland Europe are expected to be affected.

To cut expenses it would reduce property costs by relocating offices to low-cost areas in onshore locations, Logica said.

The company would also focus on reducing job duplication to reduce costs. A lot of work related to the company’s finance and HR teams are replicated at different locations, the company said. Logica also said it would focus more on offshore activities. “Outsourcing will be our fastest growing area; we want to increase its share of group revenue towards 35 per cent,” the company added.

Savings:

The restructuring would save £15-20 million in 2008, about £50 million in 2009, and about £80 million annually from 2010, the company said.

Logica said the savings would be reinvested to boost sales and marketing capability. Logica also said it would increase the number of employees to 8,000 by the end of 2009, compared with the present 3,450 employees. At present, bulk of the company’s employees (3,000) is based in India. Most of the growth in the number of employees would be at Logica’s Chennai centre, the company added.