Both the Global Services (BPO) business, and AMEAA market are apparently delivering 'excellent organic growth' for Serco so far in 2013. We assume this means BPO is at least meeting last year's 12% organic growth (see here).
New UK BPO wins so far this year include a new high street retailer, adding to last year’s successes with online retailers Shop Direct (see Serco wins retail BPO megadeal) and Freeman Gratton Holdings. In the UK public sector, Serco secured an extension to its largest central government contract for the DWP’s Child Maintenance Group. This deal was brought on board via its acquisition of Vertex Public Sector last June (see here), so this extension is a good endorsement of the work being done. Serco employs c1,000 people on this contract recovering child maintenance payments.
Along with other new wins at JobCentre Plus, UCAS, DoH and the Food Standards Agency, Serco's total contract value in central government since the start of 2013 is apparently £100m+. This certainly backs up what we are seeing as a very buoyant central government BPS market (see Business Process Services opportunities in UK central government).
Across the broader business there are a couple of concerns. At c£900m the level of new wins is down significantly from £3.9bn this time last year (see Serco on track for 2012). So Serco will really need to accelerate deals signings during the rest of 2013. Second is the ‘very tough’ on going environment in in the US federal market, which is impacting its Americas division.
Despite these uncertainties, Serco expects to meet FY13 targets. It is banking on further strong growth in AMEAA, an improving UK outlook, and cost efficiencies to achieve this.