IT consultancy firm, LogicaCMG has announced plans to create a new outsourcing division in the aftermath of an executive shakeup.

LogicaCMG has been facing some tougher times of late, with falling profits and a change of its executive lineup to compensate. Despite this, the company has announced the opening of a brand new outsourcing division, which will be lead by the outgoing chief operating officer, Jim Mckenna.

“This is the first result of LogicaCMG taking a long, hard look at its business with the arrival of its new CEO, Andy Green. Around a third of LogicaCMG's revenues come from outsourcing and under the previous regime the vendor had a target of '30-40 percent' of revenues from outsourcing. While it achieved its target, there were some discrepancies between the achievements in different countries, ranging from the low teens in the Netherlands to 40% of revenue in the UK.” said Ian Brown, senior analyst, Ovum.

Brown believes that LogicaCMG wants to boost outsourcing revenues across Europe to match the level of those in the UK. This could be brought about by increased scaling, such as hauling more business out of Germany. There’s also the fact that several of the company’s recent acquisitions are yet to be fully integrated, such as Unilog and WM-Data, which will now doubt provide a substantial boost once they’re completely brought into the fold.

“There are numerous synergies that can come from sharing expertise, skills and go-to-market capabilities across geographies. LogicaCMG already manages its vertical-industry lines of business 'internationally' so that it can identify similar opportunities across geographies and ensure that knowledge and skills are shared rather than duplicated. It seems to us to make a lot of sense to run the outsourcing business in a similar fashion.” said Brown.

According to Ovum, LogicaCMG’s competitors are thinking along the same lines, with major threats such as Capgemini already co-ordinating their outsourcing business on a global basis.

“To some extent, LogicaCMG's move could be seen as falling in line with industry norms. Lastly, an international Outsourcing Services division should enable LogicaCMG to go after more pan-European and international outsourcing deals. All in all, then, we see this as a positive move.” said Brown.