Outsourcing giant Capita is set to implement significant job cuts, resulting in the elimination of up to 900 positions. The company aims to streamline operations and reduce costs, projecting annual savings of £60 million starting from the first quarter of 2024. The job cuts will primarily impact indirect support functions and overhead roles within the organization.
Despite this restructuring, Capita remains on track to meet its performance expectations. The company has successfully secured contracts worth £2.9 billion thus far, surpassing its projected total of £2.6 billion for 2022. Capita’s Chief Executive, Jon Lewis, stated that the company is accelerating its delivery of efficiency savings, increasing the target for overhead cost reduction to £60 million annually commencing from Q1 2024.
As part of its ongoing organizational review, Capita is actively identifying further areas for cost efficiency enhancement, with plans to implement these strategies throughout 2024. The company operates as a critical service provider in various sectors, including the collection of the BBC TV license fee and outsourced IT services for substantial portions of the NHS.
Capita encountered challenges in the form of a pre-tax loss of £67.9 million during the first half of this year, significantly contrasting with the previous year’s profit of £100,000. Factors contributing to this loss include costs associated with a Russian cyber attack, which amounted to approximately £25 million. The attack targeted Capita’s Microsoft Office 365 software, leading to the compromise of personal data belonging to both employees and clients.
The decision to implement job cuts followed an announcement that Capita has secured a new contract to manage the Civil Service Pension Scheme, valued at £239 million over a span of ten years. Additionally, Capita continues to hold a £456 million contract for the collection and enforcement of the BBC TV license fee while managing military recruitment processes for the Ministry of Defence.
Overall, Capita’s cost-cutting measures reflect a broader effort to optimize efficiency and adapt to evolving market dynamics. By strategically reassessing its operations, Capita aims to position itself for sustained growth and enhanced competitiveness in the outsourcing industry.
Frequently Asked Questions (FAQ)
What is Capita?
Capita is an outsourcing company that provides a range of services to different sectors, including the collection of the BBC TV license fee and outsourced IT services for parts of the NHS.
Why is Capita cutting jobs?
Capita is cutting jobs to reduce costs and improve efficiency within the organization.
How many jobs will be affected by the cuts?
Capita plans to eliminate up to 900 jobs as part of its cost-cutting initiatives.
How much money does Capita expect to save through these cuts?
Capita aims to save £60 million per year starting from the first quarter of 2024 through the job cuts and associated cost reductions.
What factors contributed to Capita’s pre-tax loss?
Capita’s pre-tax loss was influenced by the costs associated with a Russian cyber attack, which amounted to around £25 million. Additionally, business exits and write-downs on the value of certain divisions contributed to the loss.