Capita raises threat of further job cuts under plans to save another £100m

Outsourcing giant Capita has raised the spectre of further job cuts as it revealed plans to slash another £100 million in costs after slumping to an annual loss.

The group, a major contractor for the Government and local authorities, said it was pressing ahead with a “rapid” cost-cutting plan as it swung to a £107 million loss for 2023 after revenues fell and it took a £25 million hit from a cyber attack.

The firm, which employs around 47,000 people, said it was looking to save another £100 million a year by the middle of 2025.

Capita is already cutting around 900 jobs under existing plans to save £60 million annually, which was announced last November.

It is thought the latest cost-cutting drive could impact jobs further, but Capita did not provide details of where the savings would be made.

A further update on the plans is set to be made at a capital markets event in June.

Shares in the firm, which manages the licence fee for the BBC and runs recruitment for the Army, slumped by around a fifth in Wednesday morning trading after the results proved worse-than-expected and as the firm cautioned that it was unlikely to see revenues rise over 2024.

It said revenues are expected to be “broadly in line” with last year on an underlying basis.

Capita’s recently appointed chief executive Adolfo Hernandez said: “We need to deliver a rapid reduction in our cost base and are on track to deliver the net £60 million annualised cost savings, from the first quarter of 2024, as announced in November.

“Today we are announcing further material efficiency improvements of £100 million to improve our competitive position.

“I look forward to sharing more details on Capita’s future strategy in June.”

Results revealed the pre-tax losses in 2023 follow profits of £61.4 million in 2022 and come after revenues dropped 6.6% to £2.8 billion.

It was also sent into the red by a £25 million cost of a cyber attack last year when hackers breached its systems and were able to access the personal data of some staff and clients.

Around 90 organisations wrote to the Information Commissioner’s Office to report that their data might have been breached.

Alongside the job cuts so far announced, Capita is also trimming its office network, having shut 19 sites and consolidated a further 14 in 2023 to better align with home working.

The actions meant it has cut its office space by nearly a third (31%) in the past three years.