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November 21, 2023

Capita plans 900 job cuts as it lands £239m civil service pension contract

The outsourcing giant is accelerating a cost saving programme, which means redundancies are on the cards.

By Matthew Gooding

Capita will make up to 900 job cuts in cost-cutting measures designed to save £60m a year. It comes 24 hours after the outsourcing giant announced it had landed a £239m contract from the Cabinet Office to administer the Civil Service Pension Scheme (CSPS), which will see it digitally transform how the scheme operates using generative AI.

Capita is making up to 900 staff redundant. (Photo by T.Schneider/Shutterstock)

News of the redundancies was announced this morning following what the company describes as “an extensive organisational review”. It is one of the largest suppliers of IT services to the UK government, and in total holds UK public sector contracts worth £6.5bn.

Capita job cuts will ‘save £60m’

In a statement to investors released this morning, Capita said that “[b]ased on an extensive organisational review, the group will shortly commence employee consultation programmes”, which are expected to deliver cost savings of £60m a year from the first quarter of 2024.

The company said: “The organisational changes proposed primarily impact indirect support function and overhead roles which means that approximately 900 roles are at risk of redundancy.” It will incur costs of £27m as a result of the lay-offs.

Capita employs over 43,000 people around the world. It has not been confirmed which locations will be impacted by the job cuts. Tech Monitor has contacted the company for further details.

In August, Capita announced it would be undergoing a cost-cutting exercise with the aim of saving £40m, and Jon Lewis, its outgoing CEO, said today’s announcement represented “accelerated delivery” of these “efficiency savings”.

He added: “As part of the organisational review which underpins the programme we are announcing today, we continue to identify further areas of cost efficiency and will pursue these during 2024.”

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Lewis will leave the company on 17 January, having extended his time at the helm to help Capita deal with the fall-out of a damaging cyberattack that hit the business earlier this year set to cost it up to £25m. He will be replaced by Adolfo Hernandez, who is currently vice president of telecommunications at Amazon’s public cloud platform, AWS.

CSPS contract will rake in £239m for Capita

As some Capita staff sweat on their futures, the company also revealed it has agreed on a ten-year contract to administer the CSPS, one of the largest public sector pension schemes in the UK. The contract will commence in September 2025 and is worth a total of £239m.

Under the new contract, Capita will “modernise pensions administration systems through enhanced system design and digital innovation,” the company said.

It plans to “integrate generative artificial intelligence technology to transform the pension experience for CSPS members, providing them with personalised and engaging digital channels to better plan and manage their retirement savings”.

Lewis added: “We are committed to offering seamless, tailored experiences and with generative AI we can deliver new levels of personalisation for all CSPS members.”

Read more: Capita cyberattack saw customer data stolen

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