IT services and consultancy group Vega issued a profit warning last week and announced that it had made a number of redundancies after two of its projects were delayed.
Roger Gilbert, managing director at the company, said that about 30 workers were let go, most of which were graphics artists and not IT professionals. "It was a group of people we had no immediate need for. This is something we have never had to do before. We are a pretty cash-generative business," he said.
"This is not about cash flow. Two large orders were delayed and that created a shortfall. A group of people with specific skills were consuming the company's money. Without the contracts, we could not keep them," he added.
The two projects, with Bowman and Eurofighter, were both in the defence sector, where a third of Vega's business originates.
The Bowman radio project was for the British Army. "The Ministry of Defence chose a contractor, but in July it announced that the parts supplier was not delivering value for money. The ripple effect reached us," said Gilbert.
Vega will have to re-bid for the orders the firm had already won when a new contractor is announced. The other contract, for supplying technology to the Eurofighter aircraft, has been awarded to Vega but won't start until next year.
"We have lots of other things to do, but these two projects affected profit," said Gilbert.
In other moves, the company recently boasted a contract win from US defence giant Lockheed Martin to offer support on current and future Nasa missions.
First published in Computer Reseller News
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