British computer software and services group Logica said on Friday it would cut 700 jobs or about six per cent of its workforce and painted a bleak outlook for the industry, sending its share price plunging and hitting those of its rivals as well.
Logica said that the global information technology (IT) market had continued to worsen, notably in continental Europe and in the telecommunications and financial services sectors.
"More recently, clients have become increasingly cautious about investment decisions in advance of a recovery in corporate profitability," the group said in a statement.
"Pricing pressure has increased in some areas as the industry continues to suffer from excess capacity. IT budgets are under sustained pressure and we do not currently anticipate short term improvement."
Debt-laden mobile telephony operators, which buy software from Logica to allow customers to send text messages, were striving to cut spending and had become less optimistic for the outlook for revenues from mobile messaging services, it said.
Earnings per share would therefore be "substantially lower" in the current financial year than the previous year, while revenues would be flat. Logica shares slumped over 20 per cent in early trading, but later pared losses to 16.3 per cent at 246 pence.
Rival groups were also hit. In London the price of shares in IT company CMG slumped 8.1 per cent to 150 pence and software maker Sage lost 4.5 per cent to 186 pence.
French computer services and consultancy group Cap Gemini Ernst and Young dropped 5.3 per cent to 59.7 euros, while German business software giant SAP shed 1.3 per cent to 129.8 euros.
Mobile telephone makers were also hit. Nokia dropped 5.2 per cent to 16.9 euros in Helsinki while Ericsson stock fell 4.8 per cent to 23.80 Swedish kronor in Stockholm.