Capita has secured one of its ‘must win’ BPO renewals for 2012 - its high profile TV licencing contract with the BBC. Capita is preferred partner to continue running the service from 1 July 2012 under a new £560m eight year deal, which is expected to be signed off in early December.
The renewal is an increase of £60m (or 12% up) on the initial £500m eight-year deal signed back in July 2002. This is of course good news for Capita, which is still declining organically (see Capita: H1 revenue falls short), and as one of two ‘material rebids’ due in 2012, which account for more than 1% of its revenue, it was mightily important to resecure. The other material rebid is Capita’s £400m Criminal Records Bureau contract, which was in fact extended for an additional year in August, through to March 2013, to allow for the CRB and the Independent Safeguarding Authority to jointly procure the new service under a new single organisation. So Capita has a bit longer now to work on that other ‘must win’ renewal.
Having performed well on the initial BBC contract, Capita was always in pole position to secure the second generation of the deal. According to Zarin Patel, the BBC’s CFO Capita was ‘best value in terms of innovation and efficiencies’. Perhaps unsurprisingly, this next phase of the programme is going to be about further driving out costs, to the tune of £220m over the life of the contract. This will be achieved by re-engineering the current service delivery model and introducing new technology and analytics to increase the TV licencing revenues collected, and also further driving down on service costs. There are also savings being made by bringing together the two previous contracts into one.
Interestingly, Capita will be ‘working closely’ with CSC, and US-based IT/BPO provider iQor for cash payment services. iQor is a 14,000 person-strong player specialising in customer care, customer retention and revenue recovery services. Of course we know CSC well and it will apparently ‘continue with modernising the existing IT systems’ for the BBC. We aren’t sure where this leaves the newly Siemens-enhanced Atos however. Atos is of course the BBC’s key IT services provider, and could reasonably expect to be ‘modernising the IT systems’.