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Capita cuts projects, furloughs workers due to 'unpredictable level of disruption' from COVID-19

Outsourcer vows to help efforts in healthcare call centres

Outsourcing firm Capita has slashed £25m from planned capital spending in response to the "unprecedented situation" caused by the novel coronavirus outbreak.

The cuts, made from restructuring initiatives and "un-committed spending", are among the cost-saving measures intended to "offset the impact of expected revenue reduction", the company said in an update to the market.

The measures also include temporary closure of offices and, as we reported earlier this week, "significant temporary" reductions of salary by senior management and the board, Capita said.

Taken together, the measures are intended to produce a £100m saving to mitigate the virus's impact on the company's profit.

On top of these actions, Capita plans to "furlough" (temporarily lay off) a number of employees as per the scheme outlined by the government last week.

The statement said: "We employ over 40,000 people in the UK. Where, as a result of COVID-19, any of these cannot work from home and are not required to come into their normal workplace, their roles will be furloughed in accordance with the UK Government scheme and they will receive 80 per cent of base salary, up to £2,500 per month."

Capita has so far not said how many people this may affect. The Reg has asked the company for comment.

The outsourcer went on to assure investors of its strong £450m cash position liquidity and said it was able to service its debts. "Our existing financing arrangements and mitigating actions currently provide sufficient liquidity and enable Capita to meet covenants at the half year, and operate through these unprecedented times," the company said, withdrawing the guidance it issued on 5 March.

It also said it was "exploring more than 100 situations to support the UK Government COVID-19 response with additional services."

The results posted with that guidance were not exactly optimistic. Its shares fell as it posted larger than expected losses for calendar 2019. Revenues were down 4 per cent to £3.7bn while and operating profits fell 8 per cent respectively to £0.4m. It made a loss of £62.6m before tax.

The firm said that the only people now working at its sites in the UK are key workers, as defined by the UK government, or who are within an exceptional category of people providing other essential services. "Where working from an office is still necessary, we are following all government guidance on health and safety," it said.

Capita's staffers, of course, are not limited to the UK: "In India, South Africa and Europe we continue to make progress with enabling greater numbers of our colleagues to work remotely."

India instigated a lockdown earlier this week and commentators have claimed the country's broadband infrastructure is not well suited to service centre employees working from home en masse.

The group said its order book at 31 December 2019 was £6.7bn. Notable recent contract wins include a three-year extension to a Ministry of Justice contract (£114m), a new project for a high street bank (£33m) and a software contract in healthcare worth £19m.

The company also said it was helping the UK government's response to the COVID-19 outbreak. "This includes contributing resource to healthcare call centres as well as being part of an initiative to set up health testing centres. Some private sector clients have also asked for additional help to respond to higher demand from their customers."

We have asked Capita for comment. ®

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