UK outsourcing firm Capita shifts focus to core business segments
LONDON, UNITED KINGDOM — British outsourcing group Capita recently unveiled its strategic plans to concentrate on core business segments, aiming to enhance financial performance and cash generation.
The announcement marks a significant shift in the company’s operational focus.
Capita’s cost-cutting measures and financial challenges
In March, Capita flagged cost-cutting measures worth approximately £100 million ($127.8 million) following an annual loss and increased cash outflows.
These financial challenges were attributed to costs related to a cyberattack last year and the exit from certain business areas.
The company aims to mitigate these issues through a more streamlined approach.
Focus areas and restructuring plans
Moving forward, Capita will concentrate on its public services, contact centers, and pension solutions businesses. The company plans to restructure and rightsize the organization to reduce costs, enhance efficiency, and improve cash flow.
This strategic realignment is expected to bolster Capita’s operating profit margins to between 6% and 8% over the medium term, with free cash flow generation anticipated from 2025 onwards.
Capita CEO Adolfo Hernandez added, “Our technology strategy will be organic with low capital intensity and will be principally funded through partial reinvestment of our previously announced £160 million (US$203.6 million) cost-saving program and refocusing of the business towards more profitable customer solutions.”
Outlook and expectations
The strategic focus on core segments is designed to position Capita for sustainable growth and improved financial health.
By honing in on its strengths and optimizing operations, the company aims to navigate the challenges posed by past financial setbacks and emerge stronger in the competitive outsourcing market.
