Feeds

Capita poises axe over 1,000 staff - jobs headed to India

As it lands huge UK.gov deal

Build a business case: developing custom apps

Exclusive Capita IT Services (CITS) has told 1,000 staff they are at risk of redundancy and plans to offshore roles to India.

The cuts were announced to employees this morning on the same day that the Department for Education confirmed that CITS was among 18 companies selected for an £575m IT framework.

Company insiders told The Reg that management confirmed to back-office workers and programmers that their roles were in danger and kicked off a 90-day consultation with them as required by law.

"There is scope for 1,000 potential redundancies," said a source.

Sources say some of the developer roles will be outsourced to Pune, one of seven Capita offices in India. It is understood affected UK staff will be asked to help train those workers in India.

A Capita spokeswoman said:

In order to maintain its competitive position in the marketplace, optimise operational efficiency and maintain and improve service delivery to its clients, Capita’s IT services business has concluded that a revised delivery model is necessary.

As a result, on 30 March  we commenced a series of consultation exercises involving our employees and their representatives, some focused on moving elements of our work activity to our existing IT services operation in India, and others focused on achieving headcount efficiencies on a function or location basis in the UK.

"At this stage we believe this may lead to approximately 400 redundancies," she added. This latest blow to staff – CITS employs 3,800 workers – comes amid other austerity measures being initiated by Capita, including freezing salaries and canning bonuses.

In an internal update to staff, seen by The Reg, Capita said it was expecting the economy to be challenged in 2012 and said the business had "much to fix".

In 2011 the group reported sales of £2.9bn and pre-tax profits of £302.9m, down from £309.8m. The contract pipeline was £4.6bn.

John O'Brien, analyst at TechMarketView, said in a research note today that Capita wants to take on the big pure-IT services players. He noted Capita has an operating margin of 9.2 per cent - or 5.5 per cent when amortisation and acquisition costs are factored into the equation.

"With no leverage on pricing for the foreseeable future, Capita will have to rely on cost efficient delivery to improve the margin," said O'Brien.

"This generally comes from a combination of low-cost resources (i.e offshore), non-linear services, superb execution on fixed price contracts, and sophisticated resource allocation processes to drive optimum utilisation and bench levels.These are areas in which we feel Capita has everything yet to prove." ®

Boost IT visibility and business value

More from The Register

next story
Microsoft's MCSE and MCSD will become HARDER to win
Redmond decides it won't replace Masters certifications, so lesser certs get more rigour
Pinterest diversity stats: Also pale and male (but not as much as Twitter)
Cats'n'flowers site latest to admit white men rule its roost
MoJ IT workers 'n' pals extend strike action over privatisation
Fears of cuts when shared services gig moves to Steria
Pleased to meet you. I'm Joe Bloggs, MVP, vExpert, Cisco Champ
What a mouthful. Do customers care? Six title-holders quizzed
'Oh my god – Mark Zuckerberg wants to meet me'
'The Swiss have got no great interest in working with Apple'
Dammit, Foxconn: Where's our 1 MILLION-strong robot ARMY?
'Foxbots' just aren't good enough to take up the slack
Devs: Fancy a job teaching Siri to speak the Queen's English?
Spik propa lyk dis blud innit, ya get me?
Bankers bid to use offshore temp techies
WikiLeaks publishes Financial Services Annex to 50-nation Trade in Services Agreement
Hey! Where! are! the! white! women! at!? It's! Yahoo!
In non-tech jobs, that is – still mostly white men running Marissa Mayer's web biz
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.