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Outsourcing market fine despite cutbacks, says Capita

By This Is Money
Updated: 11:47 EDT, 10 May 2011

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Outsourcing giant Capita dismissed suggestions its market is drying up due to spending cutbacks.

CEO Paul Pindar: Last four weeks have seen a pick-up in amount of public sector work going out to tender

Demand is rising both from local and central government, it said, while private sector business is buoyant.

The firm, which administers the Criminal Records Bureau and collects the BBC license fee, said: 'The market for outsourcing has become more active following a quiet 2009 and 2010'.

Local government and defence are the strongest public sector markets, with the 'the number of new tenders across our areas of expertise now at the levels enjoyed prior to the May 2010 elections and the public sector spending freeze,' it said.

Chief executive Paul Pindar said the last four weeks had seen a pick-up in the amount of public sector work going out to tender, a reversal of the trend only six months ago when it said the cutbacks had hit it harder than expected.

Capita still cautioned that revenues growth in the first half of this financial year will be 'modest', but that progress after that should be better especially as several big orders potentially could come through.

This includes a re-bid for the BBC licence fee deal and contracts for army recruitment and with Edinburgh City council.

The government's plans for public services are due in June in a white paper delayed from February. Recent reports had suggested the government might rein back the amount of business its hands over to outsourcing companies.

Private sector growth is being led by a buoyant financial services sector, especially administration work in the life and pensions and insurance markets.

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