Capita still squats on top of the UK's software and IT services heap

Still the biggest, despite the massive losses ...

Even in its darkest hours, Capita still clung to its status as the top UK supplier of software and IT services (SITS) for 2017 – though largely because its next nearest rivals played a stinker.

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Everyone's favourite outsourcing badass – Capita for the absence of doubt – hauled in £3.484bn, up 0.8 per cent on the prior year, according to data compiled by the good folk at Brit analyst TechMarketView.

Increased trading came "despite a tumultuous year", the market watcher noted, and indeed it was: Capita lost £515m in the calendar year. Its position was helped by second-placed DXC Technology's SITS sales in the UK dropping 7.6 per cent to £2.787bn and by the 7.3 per cent decline of IBM to £2.696bn.

In business process services, Capita turned over £3.2bn, a rise of 0.4 per cent in a market segment in which the top twenty suppliers grew 4.5 per cent in total to £7.314bn.

"Capita continues to find life tough as it started the process of adjusting to the new realities in its core business process services market," TMV said.

The analyst noted a "disruption taking place within a market moving away from traditional BPO (business process outsourcing) towards technology enabled services".

Capita was far from alone here, as some of the largest sector players "stagnated or declined". DXC Technology declined in business process services by 2.5 per cent to £390m and Sopra Steria was down 7.6 per cent to £348m.

Some new faces emerged including Link Asset Services (it bought Capita's Asset Services division for £888m), and Conduent was spun out of Xerox.

In enterprise software, Capita flogged £284m worth of wares to the UK public and private sector, down 2.1 per cent. The top twenty suppliers grew overall by 2.5 per cent to £7.353bn.

Baby tries to drink from a water hose. Photo by Shutterstock

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The drop in software sales came despite Capita spending £57m on Microsoft licensing services provider Trustmarque – a business that El Reg understands has struggled under the control of Capita.

Capita hired Jonathan Lewis as its third CEO in four years last summer; he is billed by TMV as a "turnaround specialist" and his arrival continued the restructuring that was started by his predecessor Andy Parker, who exited after three years in the chair.

TMV said:

CEO Lewis "cleared the decks" with its delayed 2017 annual results that revealed the size of the problem reflected in massive losses with some £850m write-offs obliterating the £450m of "underlying" operating profit.

The "transformation programme" is supposed to make the group leaner – surely not meaner? – but will require £500m investment in Capita's infrastructure, tech and people over the next three years, the analyst said.

The plan to do "fewer things better" – software, HR, customer management, Government services and IT Services – may help Capita draw "a clear distinction between itself and the more traditional cost-led approach to outsourcing".

TMV concluded: "The new strategy clearly addresses some of the long-term issues that have been known with the business for some time. It's hard to argue with much of Lewis and his team's diagnosis of where the issues sit and indeed the medicine proposed, much of which has been long overdue The proof now will be in the execution."

Accenture remained the fourth largest SITS supplier in Blighty, up 8 per cent to £2.196bn, followed by Indian group TCS, which jumped 8.6 per cent in sales to £2.041bn. ®


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