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Capita is on track to deliver 3% organic growth and a ‘strong profit position’ in 2012, and anticipates further strong progress in 2013, according to today’s IMS. It’s seen a record £1.7bn of major contract wins so far in 2012 – three-quarters of which are new business wins - and reports a £4bn pipeline (down from £4.6bn in February) and ‘buoyant list of prospects’. Encouragingly, the pipeline is almost entirely new business (98%) rather than renewals, with only two material contracts due for rebid over the next seven years.
With all this bullish talk, you might reasonably expect organic growth to be more than 3% in 2012 – remember our forecasts show the UK BPS market as a whole growing at 6% this year (see here if you subscribe to BusinessProcessViews). The discrepancy suggests underperformance in other areas of the business, including property consultancy, parts of IT services and insurance services is still an issue (see also Capita on track, but problem areas still need addressing).
Despite the budget cuts, the public sector is once again Capita’s richest hunting ground, accounting for 68% of the bids in the pipeline, mainly in central and local government, education and defence. The buoyancy of Capita’s public sector business supports our view that business process services will continue to be one of the few real drivers of growth in the UK public sector SITS market over the next few years (see our UK Public Sector SITS Market Trends and Forecasts reports if you’re a PublicSectorViews subscriber).
In particular, Capita reports significant activity from the Ministry of Justice and Ministry of Defence as well as a steady flow of opportunities from the emergency services and health markets. (We also note that Capita’s Criminal Records Bureau contract, for which TCS is reported to be the supplier-in-waiting (see TCS ousting Capita at CRB changes everything), is to be extended past its original expiry date of March next year as discussions with ‘the other supplier’ continue). In the private sector, customer management services are in most demand. Indeed, Capita is creating two new divisions – Customer Contact Management and Justice and Secure Services – reflecting the strong growth and market potential for these two areas of the business. It’s also beefing up its defence and banking credentials with new hires.