Hundreds of jobs could be lost at Logica, the troubled IT services group, when Andy Green, its new chief executive, announces the outcome of a strategic review tomorrow.

The group's British operations may bear the brunt of the cuts. The company is likely to transfer jobs to cheaper locations, in part by increasing its offshore presence in India.

Investor confidence in the Anglo-Dutch group is weak and sources say that morale within the company is low.

Between last May - when delays on a commerical contract forced the group to make a £15 million provision and cost Martin Read, the long-time chief executive, his job - and March this year, shares lost more than half their value.

Mixed full-year results and a cautious outlook in February did nothing to boost belief in the group.

However, in the past six weeks, the shares have risen 21 per cent, closing up 4p at 114p on Friday, suggesting that the City has some faith in the rescue package that has been put together by Mr Green, who joined Logica from BT in January.

The review is widely welcomed, but analysts are cautious about how long it will take and they fear that investment and restructuring costs may lead to a short-term drop in revenue.

There are also fears that an economic downturn will lead to cutbacks in IT spending.

Patrick Standaert, a Morgan Stanley analyst, said: “We are expecting the cost of transforming the business to be about £80 million, with around 1,000 staff to be replaced or changed.”

In 2002 Logica shed 1,500 staff - 10 per cent of its workforce - through compulsory redundancies in the wake of the dot-com crash, but analysts do not believe tomorrow's announcement will be on that scale.

Julian Yates, an Investec analyst, said: “People are looking for Andy Green to try to put Logica back on track and get its reputation back as a credible player.

"There is some hope he will be able to drive value out of the business and this is why the strategic update will be important.”

He said that the group must expand its presence in India or “Logica will lose bids because they can't tick the India box and price as competitively”.

Accenture and Cap Gemini have relatively high percentages of staff in India, whereas Logica has about 2,000 out of 40,000 staff, he said.

Matthew Palmer, of Dresdner Kleinwort, said: “We are not as yet seeing the perfect storm as in 2002 ... Spending is, thus far, holding up better and Andy has other levers to pull, such as subcontractors, before resorting to expensive layoffs.

"Instead, we expect he'll focus on recruiting offshore whilst maintaining flat to negative growth onshore through natural attrition.”

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