Winning back deals key to Logica success

Winning back deals key to Logica success

The Australian office of IT Services company LogicaCMG has managed to maintain its revenues and increase profit margin for the last six months, mainly through the growth of the company’s outsourcing business.

The results, for the period of September 1 - March 30, represent the first six months that include Logica’s acquisition of CMG, a merger which essentially doubled the size of the company worldwide.

While not reporting exact figures for the Australian operation, LogicaCMG’s chief executive officer, Andrew Tindell, reported that revenue was steady at around one per cent growth, while profit margin increased from 5 to 7 per cent.

“In the current market, maintaining revenue is at the top end of performance,” he said. “And the fact that we are increasing profit margins on flat revenues is a sign we are doing something right.”

Tindell said most of the company’s revenue growth came from LogicaCMG’s outsourcing services division – which not only took in a 35 per cent increase in orders, but also managed to win back some existing business.

The company has just announced that one of its larger customers, Woodside Energy, has signed an IT services contract with LogicaCMG Australia for a further three years in a deal worth a further $4 million.

Logica has managed Woodside’s application delivery and support services for the past two years and the renewal is the fourth large contract Logica has renegotiated in the last six months.

“It is a very competitive environment in our industry at present so it is very pleasing when a contract is renewed rather than going through another tender process,” Tindell said. “It is far easier to win repeat business than pitch for new business – there is less risk involved and less sales effort required.”

Tindell said most organisations renewing outsourcing contracts were primarily out to ensure that key performance indicators from existing contracts were being met.

Performing well on response times in areas such as help desk services was essential for winning back business, he said.

While LogicaCMG let go of 60 staff in January to reduce duplication of roles in the merged entity, Tindell was optimistic about hiring again in the latter half of this year.

“We have won some deals where the revenue does not come through until the second half,” he said. “I would expect we could hire another 30 staff between now and Christmas.”

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