Spending cuts bite into Capita

18th Nov 2010 07:08

Business process outsourcing colossus Capita said revenue growth in the second half of 2010 has been subdued, but the bid pipeline is at a record level.The company said the pressures on public spending are having a bigger than expected impact on a small number of the group's trading activities than envisaged at the halfway point of the year.The news on the public spending front is not all bad, however, with the group expecting outsourcing to play a major role in delivering the £6bn of savings targeted by the UK government. The bid pipeline stood at £4.4bn on 22 July 2010 with 23 opportunities. The group faces no material rebids (greater than 1% of previous year's revenue) until 2012.The private sector is also on a cost cutting drive, and Capita is actively pursuing a number of opportunities notably in financial services. In particular, it has a number of opportunities in the life and pensions market. The changes in ownership and management teams in this sector had previously slowed the bidding process of certain of these opportunities, but there is now renewed progress across these bids."We expect turnover growth for 2010 to be modest due to the unusually high degree of revenue attrition in the year, fewer sales decisions to date in the second half of this year and the short term impact of current public sector retrenchment on some of our trading businesses. However, we see the benefits of the operational efficiencies we have implemented, our increasing scale and our Indian operations continuing to drive forward our margins for the year," the group said.