Capita Consulting ditching more than a quarter of its workforce 45 days after consultations with consultants

100 people have lost their jobs, COVID-19 blamed

Exclusive It has been a bad week for the UK jobs market and Capita has just added to the unemployment stats by ditching more than a quarter of its Consulting division, sources close to the company have told The Register.

The Consulting business was officially launched in mid-December but we believe Capita began filing its ranks from June. It said it fully expected to have 450 consultants on board by the end of 2020. Then COVID-19 happened.

Insiders at Capita told us some 250 consultants were put at risk of redundancy in a 45-day process – the division employed around 370 in total at the time. However, after consulting with the consultants, Capita yesterday told 100 of them that their services will no longer be required. Staff are expected to start leaving the business from 23 July.

Just last week, Capita provided a first half-year trading update for calendar '20, forecasting that its revenue for the six months from January to June are likely to be 10 per cent below the £1.838bn in revenue the company reported for H1 2019.

CEO John Lewis said of the Consulting division in the update that it was "getting good traction in certain verticals such as cyber and justice and the business is expected to grow this year. However, we are now working in the most challenging markets in recent memory."

He said Capita had "focused the business to reflect this new outlook onto a smaller range of vertical markets and capabilities."

The picture painted by Capita in its Annual Report 2019 [PDF] portrayed the Consulting unit as being integral to exploiting the nebulous UK "digital transformation" market that IDC predicts will be worth £1.5tn by 2022.

The unit "gives us a front-end capability, an incremental revenue stream and insight into the key strategic business challenges of our clients," the annual report added. "This will in turn allow us to create pull-through for other Capita services and maximise opportunities across the whole of the organisation."

A source told The Reg that Consulting was meant to gel with the other units, but claimed in reality it had become "another silo of people with their own relationships, it's not joined up." The source said multiple divisions still talk to the same customers at different times about the things they are trying to sell.

We asked Capita about the changes at its self-described "challenger" Consulting brand that was going to take on the likes of PwC, Deloitte, KPMG and Accenture, a spokesperson told us:

“As a result of the Covid-19 crisis, the demand for consulting services across UK industry has shrunk dramatically and we’ve had to reshape our consulting business accordingly. Regrettably this will result in a number of job losses. We remain fully committed to our consulting business which has already gained good traction in a number of industries – such as in cyber and justice – despite it just being launched in December. We look forward to its growth accelerating as demand picks up again in future.”

Cuts at Capita follow reports earlier this week that Accenture will chop up to 900 jobs or 8 per cent of the workforce in the UK as it confronts the COVID-ravaged economy.

Accenture said in a statement: "We remain confident in our business in the UK for the long term. We are taking steps now to be able to continue investing in our workforce and our business, ensuring we have the right people with the right skills to best serve our clients and are well positioned for the future. We have notified our UK people that it is necessary to go into collective employee consultation for a proposed redundancy programme."

Other businesses tightening their belts in the UK this week include Upper Crust, which said it will cut up to 5,000 jobs; EasyJet confirmed it is laying off 1,300 crew and 727 pilots; Harrods will eject 700 employees; and Airbus some 1,700.

Lockdown, which began on 23 March in the UK, took a toll and gross domestic product was down 2 per cent in Q1, according to the Office of National Statistics. ®