Capita to close more offices as working from home options increase

The outsourcing company Capita is planning to close more offices and extend flexible working for its staff as it uses experience gained from operating through coronavirus lockdowns to seek further cost savings.

Capita, one of the major providers of outsourced services to the UK government, aims to raise £700m by selling off assets and cutting costs.

In its 2020 annual results announcement, Capita said its experience with Covid-19 had enabled it to “take steps to sustain some of the benefits and cost savings, mainly in travel and property”.

The company employs the majority of its 55,000 staff in the UK, and provides government services ranging from collecting the BBC licence fee to enforcing London’s congestion zone.

Capita reported an annual loss of almost £50m for 2020 and said it planned to halve its number of business divisions from six to three.

It is already one of the UK companies adopting more flexible working, after it said it had demonstrated to clients during the pandemic that remote working could be secure and productive.

The company permanently closed 11% of its office space in 2020, including its London head office, and is looking to reduce its office space by a further 15% in 2021.

The company announced last August that it was planning to hire 900 staff to manage London’s congestion charge and low emission zones, the majority of whom would be allowed to work remotely and encouraged to work from home.

Two of Capita’s new core business divisions will be focused on its government and blue-chip clients, where it intends to grow the business, while a third division will include non-core assets, some of which it is looking to sell.

Capita said its new public service division would be one of the government’s largest strategic suppliers, in a UK public sector outsourcing market that it estimates to be worth about £69bn a year.

The firm reported a 10% fall in revenues to £3.3bn in 2020 compared with the previous year.

The group’s order book declined to £5.9bn in 2020, from £6.7bn a year earlier, after it lost some contracts that had an impact on the second half of 2020.

Jon Lewis, Capita’s chief executive, said he was pleased with the firm’s response to Covid-19 and the challenges of 2020.

“Despite the challenges, we have continued to make good progress, improving client relationships and winning significant new contracts. Capita is a much better business than it was three years ago when we began our transformation,” Lewis said.

He added that the company planned to return to organic growth in 2021 and achieve sustainable cash generation in 2022.