Well, now we know where the contract went – it went to Logica! Last November, troubled UK BPO player, Xchanging, announced that its flagship client, BAE Systems, was not to renew a major HR BPO contract, due to expire at the end of this year (see Xchanging loses HRO deal with BAE Systems). The contract was worth £18m p.a. to Xchanging and was generating a 5% margin. The deal with Logica is for six years and we’d assume is on better terms (but not too much better, we hope!). This is Logica’s second major European BPO deal, having won a similar contract last year with international retailer, Ahold.
Xchanging was partnering with HR RPO (recruitment process outsourcing) provider, Alexander Mann Solutions (AMS) at BAE Systems (see here), a bit of a ‘shotgun wedding’ affair after Xchanging found itself struggling with the onsite part of the deal. AMS will continue to work with Logica.
While it’s great to see Logica winning multimillion pound, long-term outsourcing contracts, we’re not exactly clear how a 5% deal will help Andy Green restore group margins in the medium term.