Ovum comments: Consolidation in IT Services accelerates as CGI announces intention to acquire Logica

(PresseBox) (London, ) Following the announcement that Logica is to be acquired by CGI, Tom Reuner, principal analyst at Ovum has the following comment:

"Logica has long been muted to be an acquisition target after challenges in execution and cost structure. Given the pressure on its share price after the last earnings announcement, the move is hardly a surprise. More of a surprise is the company who announced its intention to acquire one of the last British IT stalwarts. Geographical scope and portfolio are complimentary. Both organisations have a strong focus on financial services and public sector and both are deeply entrenched in BPO.

"In these verticals the new organisation has the potential to become a leading global player, but the challenges will lie in the integration and the cost structure, given that both organisations have only limited global sourcing capabilities. The context for the announcement is the relentless consolidation and the need for scale to compete. More moves are likely not least because of the turbulences of the financial markets. India based providers have made a lot of noise of eyeing acquisitions in Continental Europe. But as with CGI, the bidder might not always be the obvious choice. And last but not least, a bidding war as with Axon should not be ruled out."

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