Interview: Seamus Keating, Logica CFO

Altered ambitions
Keating points to Logica’s lastest results as the fruition of a pivotal change in company ambition some years back, moving from the aim of becoming the number one IT services provider in the world to instead focusing on being the number one player in Europe. And in early 2008, a review of Logica’s cost structure he led took out significant overheads – so it could “concentrate on selling more of what our customers would want to buy in the recession”.

In 2005, Keating came out all guns blazing on a plan to double the size of the business – on top of its sudden expansion after absorbing CMG – though he admitted to Financial Director it was “a tall order”. After an acquisitive spree and work to embed its various new companies throughout Europe, Keating’s ambition now is to “get more value from that group of businesses by making them work better together, getting better levels of growth, getting the economies of scale for the size of the business and concentrating on the European platform”. No mention of being the world’s number one. “The world has become a more difficult place,” he adds.

Chancellor’s axe
That is acutely true for governments across Europe, which could be a problem for Logica. Public sector clients make up some 63 percent of its revenues. In the UK, George Osborne’s first Budget unveiled 25 percent budget cuts for some public sector departments, which can only mean large-scale change, headcount reduction and the potential cancellation of expensive supplier contracts in the next five years.

But on this, Keating is just as circumspect. Press reports leading up to the General Election suggested the company would have preferred a Labour victory, given the Tory taste for cutting the state down to size. Keating, however, dismisses these fears. He believes the answers to the problem of public spending is how technology is used, and the feasibility of outsourcing to reduce the cost of delivering public services, rather than just how the cost of technology can be reduced.

“Technology and IT services are an enabler to reduce the cost of delivering services. We are comfortable that all political parties today see that,” he says.

That is not entirely lining up with what Logica’s CEO Andy Green told the Financial Times this February. He pointed to a possible “hiatus” in public sector work beyond the election – “though in the medium-term all European countries will need to invest in automation to get spending down.”