Logica's restructuring announcement has been slammed by analysts as being less a strategy and more a plan, and follows in the wake of a fumbled outsourcing strategy announced earlier this year. CEO Andy Green's honeymoon period would seem to be over, and further tough decisions lie ahead.

The services company has announced that it will invest £110 million in a restructuring programme to save £80 million annually from 2010. In the short term, this involves the loss of some 1,300 jobs in Europe – about two percent of the European workforce overall, including 500 UK workers.

Globally, Logica aims to double its offshore and nearshore headcount by 2009, with India being the greatest beneficiary.

CEO Andy Green, who took charge in January this year, has said he wants to reduce costs and minimise job duplication, and then move forward with an improved concentration on outsourcing – which he aims to shunt towards a 35% group revenue share – and offshoring.

Logica says the ongoing savings will be reinvested to boost sales and marketing capability.

Despite this, analysts at Ovum have greeted the announcement with the response that it is “a plan, not a strategy”, while acknowledging that Logica has set targets for revenue growth and margin improvement in 2009 and beyond.

The analyst firm believes that while the CEO's diagnosis of the company's ailments is correct, his response lacks the essential strategic vision a leader should supply – especially in a chilly economic climate.

Ovum analyst Phil Codling said: “The focus on growth is a no-brainer; Logica needs growth, particularly in two key European markets, UK Commercial and Germany, and it has to become more proactive and more sales-led if it's going to achieve that.

“A cost-cutting plan is another no-brainer; Logica will cut non-billable back-office staff, shift headcount to offshore, and rationalise buildings (40% reduction in deskspace).

“So having got the diagnosis largely right, what Green has unveiled is more of a plan than a strategy: it's about execution not vision, it's largely a continuation of the existing direction rather than anything radically new.”

Ovum's analysis is that what was missing from Green's forward-looking announcement was a sense of renewed vision and strategy to lift Logica out of its troubles – something the company sorely needs after losing one CEO last year and fumbling its recent outsourcing announcement, as reported in News Analysis earlier this year.

By creating an Outsourcing division shortly after Green's accession to the Logica throne, the company indeed singled that out as a strategic priority. However, the establishment of the new division under former acting CEO Jim McKenna was rather undermined by news that McKenna will leave the company later this year: a classic case of office politics getting in the way of business change.

That said, if outsourcing becomes a horizontal layer in the organisational matrix – to use Ovum's analysis – then it can share skills across the organisation and feed up into local territories for local selling.

Ovum's view is robust: “We'd now like to see similar clarity of purpose around prioritising the markets and opportunities that Logica intends to pursue. It can't be equally determined to go after each and every opportunity. Even IBM doesn't attempt to do that, and Logica is nowhere near the scale of IBM, even in Europe.

“Andy Green has shown himself to be a good analyst – now let's see the vision and focus to take Logica to the next level.”