Capita’s attempts to generate organic growth is forcing the UK BPS market leader into new geographic territories (as we have seen in Capita expands in EMEA through Zurich). It is now also expanding its reach into blue collar services with its secured deal at the DVLA. This £100m deal will see Capita take on some 300 staff from the DVLA’s incumbent enforcement service provider, NSL, for the next five years, with the option to extend for a further two years.
NSL is an unusual competitor for Capita. Formed out of the demerger of National Car Parks (NCP) in 2007, it employs 5,000 people in areas such as parking, coaching and traffic enforcement where it has a number of large local authorities such as Edinburgh, Manchester and several London boroughs among its customers. NSL had operated the service since May 2006.
The deal is important for a couple of reasons. Firstly it is the first big business process services (BPS) deal let by a central government agency since the coalition government was introduced. For Capita the move shows the Group is prepared to take on increasing breadth of activities to secure public sector business. Capita is taking on a lot more than its usual white collar BPS work, assuming responsibility to “immobilise, remove, store and dispose of unclaimed vehicles through a network of 23 regional pounds”. It is also issuing vehicle excise duty (VED) and continuous insurance enforcement (CIE) notifications, more akin to its white collar work. Taking on both white and blue collar BPS activities in this way is akin to the model employed by rival Serco, which continues to notch up double-digit growth (see Serco juggernaut roles on). There are only a few other examples where Capita has taken on both blue and white collar activities in this way, such as at Blackburn and Darwen, Cumbria and Salford councils, but this is its first outside of local government.
Government organisations are expecting their suppliers to deliver against specific outcomes. In this case, Capita is supporting DVLA “in its commitment to reduce vehicle tax and insurance evasion.” Capita is paid a small fee for issuing enforcement notices, but will generate the majority of its business from fines and charges and by proceeds from the sale of vehicles. Consequently, Capita is incentivised to run an efficient service, and the upfront cost to DVLA is minimal.
This is an interesting way for suppliers like Capita to tackle the opportunities presented by the public sector cutbacks. If Capita does indeed have bigger ambitions to expand its capabilities in the broader support services space, then it will increasingly compete against a new set of players like NSL and Serco, as well as the likes of Carillion, Amey and Interserve. These companies bring various other services such as construction, infrastructure, engineering and facilities management to the table. I aim to explore this topic in a lot more detail in a future report for TechMarketView’s BusinessProcessViews service.