Capita faces strike, gov uncertainty

Local government outsourcing specialist Capita has told investors it has had a decent year and is optimistic about future orders - despite the current clowning at Westminster and the danger of strike action at one of its divisions.

Capita said it expects modest turnover growth thanks to quieter sales in the second half of 2009. But it predicts growth in its Indian business, and other efficiencies to help push profits. All metrics are on target for the first quarter.

The company said that although the future shape of the UK government remains a mystery it believes a focus on cutting costs will benefit its offshoring business.

So far this year it has secured £322m in contracts including deals with Virgin Money (for insurance products), Sheffield City Council, Aviva and AXA.

Capita's trading update is here.

Less welcome news for the firm comes from the union Unite which balloted people working for Capita's life and pensions arm. Staff overwhelmingly rejected Capita's suggested changes to their own pensions.

Capita is proposing to move staff brought in from the Pru and Pearl Group onto contributory pensions which Unite reckons is a breach of long-standing commitments to staff.

Staff at one site voted 98 per cent against Capita's proposals. Although the ballot is short of approving industrial action that is the likely next step if no agreement is found.

Capita deals with dozens of different local and central government functions as well as providing back office processing for many financial services and insurance companies.

Capita staff working on the AXA account, mostly transferred from AXA, are the next to be balloted. More on that here. ®