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Dixons has confirmed that it has cancelled plans to outsource its IT support to LogicaCMG, after the two companies were unable to agree on the terms of the deal. It now says it is "reviewing its options" about how to proceed.

In a statement, the company said: "We can confirm that we have ceased negotiations with LogicaCMG regarding the potential outsourcing of our internally facing IS support function. We have been unable to agree terms."

It has denied reports that some IT staff had already been made redundant, saying that the deal was not about redundancies, and some 210 staff would have been transferred to LogicaCMG if the deal had gone ahead. Other reports suggest some staff had already rented out their houses, in anticipation of moving to Bangalore.

Dixons says it does not deal directly with unions, preferring to negotiate with internally created employee forums. A spokeswoman for the company told El Reg that the reaction in the IT department has been "mixed", before adding: "We are doing everything we can to keep people informed".

The deal was officially nixed on Monday, and staff were informed then, the spokeswoman said. CIO Iain Andrews is reported to have left the company, also on Monday. The spokeswoman said he was "reviewing his career options outside the Group", but declined to elaborate on whether the two events were linked.

Dixons told us in May that it was considering outsourcing its IT function, and later confirmed the plans in an interim financial report. However, it said claims that it was negotiating with LogicaCMG were "premature". ®

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