back to article Just can't catch a break, can ya, Capita? Shares tumble 40% amid yet another profit warning

Capita's stock plunged more than 40 per cent today after the firm issued another profit warning, suspended dividends and issued £700m in new shares. In a damning prognosis of the public sector outsourcing giant's woes, new chief exec Jon Lewis said "significant change is required" at the outsourcing biz, describing it as "too …

  1. Richard Hewitt

    Crapita, putting the R in IT for 35 years.

    1. John Smith 19 Gold badge
      Coat

      Massive share price and recently hired new CEO...

      Is anyone else thinking "Carillion 2" ?

      What's there cash flow like and have they been doing the whole

      1) Wafer thin margins to get the business

      2) Using the upfront payments to pay down creditors

      3) Delaying payments on the rest of their creditors

      4) Borrowing a shed load of cash while hoping interest rates don't rise very much.

      1. cantankerous swineherd Silver badge

        Re: Massive share price and recently hired new CEO...

        and 1.6 billion of "good will" on the balance sheet

  2. monty75

    Didn't know they owned ParkingArse. Now it all makes sense.

    1. Anonymous Coward
      Anonymous Coward

      Hopefully the sell off will ultimately result in the parasites going bankrupt.

      1. Ian 7

        There's a bit of a misunderstanding going on here - Capita's market cap (# of shares * share price) has just fallen £800m. Sounds dreadful! But this is on the back of them saying they're going to issue £700m of new shares - new shares don't create new value, they dilute the value of existing shares, and that's (mostly) what's just been priced in. So market cap as measured by shares*price falls $800m now in anticipation of more shares, assuming the share price stays the same when the new shares are issued the market cap as measured by shares*price will rise £700m, net fall £100m. Nowhere near as disastrous.

        That is an assumption, mind! And I'm not defending Capita, I've had horrendous service from them in the past too.

        See http://www.bbc.co.uk/news/business-42885211 for more analysis on the share price fall, explaining better than I just did why it's not as bad as it looks at face value.

        1. Anonymous Coward
          Anonymous Coward

          I'm not sure that this is correct. If they issue £700m of new shares, then their cash position increases by £700m. The balance sheet just shows a movement between assets and capital. It shouldn't in itself, have a significant affect on the valuation of the company. Hopefully some bean counters / abacus jockeys on here can confirm...

          1. katrinab Silver badge

            Yes, but future profits get divided between a higher number of shares, so when you do the discounted cashflow on that, you end up with a lower value.

          2. dajames Silver badge

            I'm not sure that this is correct. If they issue £700m of new shares, then their cash position increases by £700m. The balance sheet just shows a movement between assets and capital. It shouldn't in itself, have a significant affect on the valuation of the company.

            That's right ... but the price per share on the markets will fall, which is what gets reported in the news.

        2. 2+2=5 Silver badge

          > Nowhere near as disastrous.

          It depends on where you stand. If you're buying shares and don't currently own any, then it makes almost no difference: you buy roughly twice the number of shares at half the previous price for no net difference.

          If you already owned shares then you've just had 42% wiped off their value selling them today versus selling them yesterday. Some of those share owners will be 'fat cat bastards who deserve it' (tm), others will be your and my pension funds.

        3. Ken Moorhouse Silver badge

          Capita's market cap

          My understanding is that there will be a Rights Issue, but that is sometime in the future, not "right now". This will need to be underwritten in the event that shareholders, who will have first refusal, decide not to exercise their rights to buy, thus diluting their holding.

          Mr Lewis is no doubt pondering a change of company name as part of his revamp. Capita Block Chain has a certain ring to it.

        4. PeterM42

          So......?

          What sort of stupid w@nker is going to buy these "new" shares in Carilion, oops, sorry - Crapita?

  3. wolfetone

    Carillion's failure started a domino effect. Crapita's suffering, Interserve also. Who goes next though is anyones guess.

    1. Anonymous Coward
      Anonymous Coward

      RE: Carillion

      My reading of the issues with Carillion was that it failed to deliver a number of large projects, largely for the public sector, on time and attempted to use debt to cover the period between expected payments and the actual payments. As the gap between the two dates became wider and the amount being covered became larger, they run out of time and creditors called time on their loans.

      I think there may have been some justification for a "government rescue" in the form of bringing forward payments to allow work to be finished as the likely cost as a whole (work either not getting done or taking significantly longer, suppliers not being paid, redundancies and work being passed to new suppliers) may cost more than the rescue and some of the project issues were a case of Carillion accepting too much risk which benefited the public sector organisation they were working with in the form of reduced cost. The counter-argument is that any Carillion rescue package would likely have resulted in the work being completed but the company wound up as it was unable to sustain it's existing business.

      1. Warm Braw Silver badge

        Re: RE: Carillion

        The problem seems to have been that they were losing money on the contracts they had and underbidding on new contracts so the cashflow could service their increasing borrowing to cover their losses in the short term while they were increasing their likely losses in the long term.

        The receiver will likely be able to sell the "Special Purpose Vehicles" (the companies set up to run PFI projects) as the government is tied into long term and relatively lucrative contracts for these. On the other hand, the government will be forced to fork out for the remedial work that Carillion would otherwise have had to fix from its own coffers on projects that are incomplete or badly built. So it's basically a lose/lose for the taxpayer.

      2. PeterM42

        Re: RE: Carillion

        "My reading of the issues with Carillion was that it failed to deliver a number of large projects, largely for the public sector, on time and attempted to use debt to cover the period between expected payments and the actual payments."

        No - the problem with Carillon was that the management were robbing the company and the pensions fund by paying themselves shedfulls of money for doing a crap job. The proof being that they went bust.

    2. Lotaresco

      "Who goes next though is anyones guess."

      Serco has to be very high on the list.

  4. James 51 Silver badge
    FAIL

    Not to mention all the negative publicity that being involved with PIP has generated. I have literally never heard of a single good news story with Crapita.

    1. macjules Silver badge

      I think "OMFG we are about to go bust" qualifies as a Good News Story where Capita are concerned. Now I just want to hear that Sopra Steria are filing for bankruptcy.

      1. smudge Silver badge
        Coat

        Now I just want to hear that Sopra Steria are filing for bankruptcy.

        They would, but they have mislaid the file...

  5. Anonymous Coward
    Anonymous Coward

    Feeling Great.......

    Some of us in some areas do a good job (if I say so myself), so I guess it's another year no pay rise.

    So fellow Reg'ers what's the contractor market like? (not been there for a while)

    Anon, obviously want to keep the job as it pays the bills.

    1. Anonymous Coward
      Anonymous Coward

      Re: Feeling Great.......

      Do what i did and get whilst the going is good.

      I took a small pay cut to get out of Crapita but now have a shorter commute and my stomach ulcer has gone away.

      All in all life is much better outside of the management cesspit that is Capita.

  6. }{amis}{ Silver badge
    Meh

    Money

    Mybe if any of their bids were actual for the real cost of the project, rather than low enough to win the contract under government rules, they might make some money.

    I really do feel the the whole "Must take the lowest bid" rule for government work needs to take into account past performance.

    Eg your last 5 projects overran by an average 30% so for comparison we will wack 30% onto your bid.

    1. wolfetone

      Re: Money

      That's far too sensible an idea for it to ever feature in any Government department.

    2. Anonymous Coward
      Anonymous Coward

      Re: Money

      Eg your last 5 projects overran by an average 30% so for comparison we will wack 30% onto your bid.

      This will only make everyone who has blown the estimates in the past bid 30% under cost to start with.

      Not that this would be a bad thing of course... If there was a way to make them deliver instead of renegotiate. A few of those and voila they are no longer in business so they cannot purchase politicians to drive through IR35 and other legislation so they can maintain a near-monopoly. OK, that is not purchase. We call that donation. It is all above board and and totally legit. Exactly as their directors sponsored Tony's Nu Labor for 8+ years.

    3. Anonymous Coward
      Anonymous Coward

      Re: Money

      I really do feel the the whole "Must take the lowest bid" rule for government work needs to take into account past performance....your last 5 projects overran by an average 30% so for comparison we will wack 30% onto your bid.

      I like the idea, but Crapita are only half the problem here - the other half is the Civil Service, which consider it acceptable to issue half baked invitations to tender, and then award contracts that either don't adequately specify what is needed, and/or they change the requirements after letting the contract.

      If (oh happy day!) Crapita went bust, the next public sector contract would go to somebody else, but have a similarly miserable outcome. This will continue until civil servants at the most senior levels are held to account for failures on their watch (and that would include treble blame-share for the grasshopper types, who move every six months in the hope of evading work, responsibility and accountability).

      1. Anonymous Coward
        Anonymous Coward

        Re: Money

        We should be taking the money out of Civil Servants pension funds, most of the ones I work for only make decision after a number of meetings.

        They also have "Compulsive Meeting Attendance Syndrome" CM-AS with a side helping of Institutionalism.

        When any of them "c*ck up" we the tax payer foots the bill, and they retire, we should demote them in rank and hence the pension is less. Lots of Senior CS bods get out retire / resign before the sh*t hits the fan.

  7. JimmyPage Silver badge

    What about the DWP PIP reassessments

    that have been announced ?

    Surely all that lovely new lolly must count for something ?

    1. James 51 Silver badge
      FAIL

      Re: What about the DWP PIP reassessments

      Depends on who is going to pay for the reassessments. If Crapita can say it was DWP guidelines to fail people who qualified then they might be able to go to court and squeeze the money out of DWP. Otherwse they'll be the ones footing the bill. With forty to fifty percent getting an award or a higher award on appeal pretty much every claim goes through that stage again anyway.

  8. Halfmad Silver badge

    Panic stations!

    That's what I read into this and so does the market by the looks of it. There's a smell of "covering our backs" here by execs too, I still expect this ship to sink or shrink dramatically in the coming years as we see senior execs opt to retire early or jump ship before it finally goes down.

    1. John G Imrie Silver badge

      Re: Panic stations!

      There seem to be less and less ships to jump to though.

      1. Aladdin Sane Silver badge
        Headmaster

        Re: Panic stations!

        Fewer.

        1. Doctor Syntax Silver badge

          Re: Panic stations!

          "Fewer."

          Not necessarily. If you jump from the bigger ships those to which you jump will be the lesser.

      2. Anonymous Coward
        Anonymous Coward

        Re: Panic stations!

        you probably meant "less and less ships' decks space left above the water level"? ;) That's global warming in the business world for you...

    2. Hans Neeson-Bumpsadese Silver badge

      Re: Panic stations!

      I still expect this ship to sink or shrink dramatically

      To put things into perspective, they have significantly underperformed compared to expectations but still made a triple-digit-millions profit. So long as the beancounters are using black ink at the bottom of the accounts, shrinking seems more likely than sinking

      1. James 51 Silver badge
        Pirate

        Re: Panic stations!

        @Hans You need to think of the bonuses and the share back backs man. Think of all the half finished yatchs just languishing in dry docks the world over that haven't finished being paid for. The inhumanity of it all.

    3. nematoad Silver badge
      Unhappy

      Re: Panic stations!

      "...we see senior execs opt to retire early or jump ship before it finally goes down."

      A pity that the bastards won't pulled under by the weight of their wallets.

  9. Anonymous Coward
    Anonymous Coward

    I knew one person that worked for them.

    "Good people, shit business" was the basic comment on them.

    1. Anonymous Coward
      Anonymous Coward

      I once worked in a department which had changed hands between many such companies. The old hands referred to the companies as shirts. As in, every few years the contract goes out to tender and maybe you end up changing shirts.

      1. Anonymous Coward
        Anonymous Coward

        Not underwear?

        1. Anonymous Coward
          Anonymous Coward

          Naah, nobody gives a shit about the contracting company.

  10. Al-Noor Ramji

    Prudential is worth an article all of its own.

    It has embarked on a journey, like BT and others before it, of replacing British IT workers with resource from India both here and remotely. They are going to decimate their own workforce, and are going to push all the outsourcers to do likewise.

    Lots of spin will be about new tech, and agile methodologies, and all the usual smoke and mirrors, but under the hood it with be nothing but using the cheapest IT workers worldwide they can get.

    Expect Prudential customer service to crash dive like all the others who have followed this path.

  11. adam payne Silver badge

    As our markets have evolved, the Group has not responded consistently to new customer demands.

    Getting systems out the door that work without a load of fixes and more money from the taxpayer would be a big step. It might even help with your massive image problem.

    1. John G Imrie Silver badge

      Telling the Government 'that contract is crap we are not bidding on it' might help as well.

  12. HmmmYes

    Strange that.

    All these management driven (c) McKinsey prob. - General Electric, IBM, HP and now Capita.

    All falling to bits, blowing up, going bust.

    Look at the number of MBAs and professional (no laughing at the back!) management the West has today. Lot at the total fuckup that are happening - Airbus, name any big company.

    Things is, companies are about what they do to make a profit. Not about a fucking matrix.

    Bunch of halfwitted, innumerate navel gazers.

    1. Al-Noor Ramji

      Certainly McKinsey were heavily involved in the design of DXC, and the different HP splits, indeed they were heavily involved in the Compaq/HP merger and the HP/EDS merge. All of which have been disasters, with no redeeming features at all.

      Still they are not as bad as Boston Consulting.

  13. Graham Jordan

    Keep that shit ship sinking

    Jon Lewis - if you could perhaps take a job at DSG, thank you please.

  14. HmmmYes

    Capita's business is not too complex.

    It just does not make any fucking sense. Or profit.

    They;ve just go along bidding for business without any really core strength or ability. Just a vague assumption that whatever they do that they can cut staff and somehow find cheaper ones abroad.

    Youd expect Capita to have standardised on a small number of platforms and technologies. Then, they could reap efficiencies by replicating the core across business .End of the day, modern businesses run on transactions on a database with some business logic bolted on - thats the reason ERP exists.

    1. Anonymous Coward
      Facepalm

      "Capita's business is not too complex...."

      "....Youd expect Capita to have standardised on a small number of platforms and technologies."

      You mean make it less complex?

      1. HmmmYes

        Hmm, maybe, maybe not.

        Capita should be reaping economies of scale.

  15. Doctor Syntax Silver badge

    In a damning prognosis of the public sector outsourcing giant's woes, new chief exec Jon Lewis said "significant change is required" at the outsourcing biz, describing it as "too complex" and "driven by a short-term focus" as well as lacking "operational discipline and financial flexibility".

    And who's responsible for that?

    Ahh! I see now. He's new. Dump all the blame on the last guy.

    Is it possible that the race to the bottom might be put into reverse to try to catch out the opposition? Or is it just dead cat bounce?

    1. JasonLaw

      +1 for the DCB

  16. Allonymous Coward

    Couldn't happen to a nicer company

    I've said it before, but it seemed worth repeating.

    1. Anonymous Coward
      Anonymous Coward

      Re: Couldn't happen to a nicer company

      I expected to see that sentiment as the first comment today.

    2. Anonymous Coward
      Anonymous Coward

      Re: Couldn't happen to a nicer company

      I refuse to work for them again.

      Mandating changes to my contract only days into a new one and refusing to pay for the time and effort to revue the changes, 6ullying. Offering me a quote for business insurance under pretence of "Vetting" my company had insurance. Miss use of what the data was initially provided for.

      They deserve to fail

      1. Anonymous Coward
        Anonymous Coward

        Re: Couldn't happen to a nicer company

        We were doing an analysis for them (interesting but complex tech/business system) as an independent 3rd party. 3 weeks before the end of a 4 month project they decided that a renegotiation of payment was necessary (unenforceable under contract but lots of hints on reputation/future work). We told them to f* off (the wonders of running a 5 person business - chain of responsibility short and we would all suffer) and immediately withdrew bugger the cost. 2 months later we were ‘apporoached’ by a lwyer acting for them with threats based on breach of contract. Our legal eagle responded with a subset of our correspondence, indicated that more was available and demanded immediate payment for work done.

        Eventual outcome, resumed contract, got paid (no more or less than contract) and delivered assessment. Shame they did not act on findings - they would make a fine ‘learning’ exercise for an MBA never had any more work from them :-)

  17. Anonymous Coward
    Anonymous Coward

    domino effect?

    I wonder if this is a fallout of the recent Carillion collapse that made the investors "nervous" (aka soiled pants)? Never mind the actual crappy nature of capita and their actual state of real or "flexibly managed" accounts, they've been sailing regardless, patted on their backs by consecutive UK governments. If they crash, we'll have another round of indignation from our Glorious Leader(s), no less.

    I guess a sure sign of real trouble at capita would be, if it hasn't happened yet, when the flock at the very top of Capita quietly take to the skies, greener pastures, retirement, personal and family reasons, pursuing new options, etc. etc.

    but then, it takes more than two to domino...

    1. BebopWeBop Silver badge

      Re: domino effect?

      but then, it takes more than two to domino...

      Actually one is sufficient to get them all falling in a nice line.

  18. Dr Who

    Schadenfreude

    I'm not going to beat around the bush here. It's about fucking time that these subbie bashing, small business destroying, undercutting, tax payer and pensioner robbing, corrupt and criminally negligent outsourcing wankers got their comeuppance. Not just Capita, all of them. They are all from the same mould and they have been getting away with it for far too long.

    In our industry, the big consultancy/outsourcers are like supermarkets are to the farmers. If they can buy it cheaper abroad they will, or if not they'll squeeze the domestic suppliers until their pips squeak. Employees, the supply chain and ultimately the customer are there to be milked dry for the benefit of the share holders and senior management, who are generally long gone when the shit hits the fan.

    Don't get me wrong, I am not remotely anti-business, it's just that these companies are not viable businesses, they are organised criminals.

    1. Gordon 10 Silver badge

      Re: Schadenfreude

      Magnificent rant sir! Have an upvote.

    2. Zog_but_not_the_first Silver badge
      Trollface

      Re: Schadenfreude

      Absolutely. But I am not entirely without sympathy. Just powering up the electron microscope to find my violin...

      1. CrazyOldCatMan Silver badge

        Re: Schadenfreude

        Just powering up the electron microscope to find my violin

        There are rumours that mine was last seen at Alpha Centauri. So, not only very, very, very small, but very, very far away..

    3. CrazyOldCatMan Silver badge

      Re: Schadenfreude

      it's just that these companies are not viable businesses, they are organised criminals

      Indeed. I think the politest thing you can say about them is "they are not as bad as activist investors".

    4. Dr. G. Freeman
      Pint

      Re: Schadenfreude

      "it's just that these companies are not viable businesses, they are organised criminals."

      I think you're going to be sued for libel for that comment... Organised criminals would be angry at the comparison to Crapita.

      For one thing, the criminals are organised....

      May Crapita and their ilk crash an burn

    5. Anonymous Coward
      Anonymous Coward

      Re: Schadenfreude

      This is the company that had a council tax payment in one account for the property, could see and agree the entitlement but could not transfer it into the correct account.

      Fast-forward through 6 or 7 seven years of this and countless (cancelled) summons and office visits and the solution?

      A letter to be produced in court, outlining Capita's inability to transfer the funds but assuring the court that if the bearer was forced to attend, they did not in fact owe the sum they were being summoned for.

      Eventually (2 or 3 years later) a trainee who had been there 3 months transferred the sum and the matter was finally closed.

      This happened about 10-20 years ago in a South London borough and I still have sight of the letter in question.

  19. MJB7 Silver badge
    Thumb Down

    Same old same old

    "I have initiated a transformation programme, appointed a Chief Transformation Officer and formed a new executive committee to drive this change."

    Oooh! That'll change everything won't it. I suppose it is possible that he is actually going to introduce some significant changes - but that's not the way the smart money is betting.

    1. Anonymous Coward
      Anonymous Coward

      Re: Same old same old

      "Lewis's turnaround strategy ... involved axing 2,250 staff, sending more jobs to India and using robots to automate certain parts of the operation."

      Significant change by doing the same thing they've always done? Doesn't look promising.

      1. Anonymous Coward
        Anonymous Coward

        Re: Same old same old

        "sending more jobs to India"

        I have seen people from India over here to work and they swap them out ever 2 years.

        We end up training them up, I now refuse to transfer my skills.

        And its not just Capita

    2. Korev Silver badge

      Re: Same old same old

      On the other hand, he could give the power to the new committee which causes some of the old guard to move on. I saw this happen at a previous employer.

    3. Missing Semicolon
      WTF?

      Re: Same old same old

      They really do act like an Emperor and his court, don't they?

      They fail to realise that the job of "initiating a transformation programme", and "driving this change" is that of the actual senior execs. It is, quite literally, their day job. If they can't do it, the shareholders should boot them out and replace them with people who can!

  20. Anonymous Coward
    Anonymous Coward

    If I was a nice and gentle..

    I would have this message to capita:

    https://www.youtube.com/watch?v=gmOTpIVxji8

    but I'm not gentle, so I wish them all the worse. Only that, if the shit does hit the fan in crapita, who's going to suffer? Exactly :/

  21. HmmmYes

    Are they bust yet?

  22. Scott 53

    "In a shit sandwich, containing very little bread"

    Well done there

  23. fruitoftheloon
    Happy

    My ha'pennies

    I left there 11 years ago, I had a pretty good 6 years or so, based at head office, after I left, the new boys at the top table were definitely of the same calibre as the old guard, imho...

  24. Anonymous Coward
    Anonymous Coward

    Sucks

    Some of us work in a well organised well run part of capita, with great teams, do well financially as well as exceed customers expectations. Our profits are propping up the failing parts of capita that need to go.

    As JL said, past management have spent all their time buying up little businesses to make the numbers up to look like the revenue is increasing, then leaving the job just before the costs show up in the next year.

    Cant we have a CEO that lasts more than a few years with an actual long term plan.

    I love my area of capita, but the rest of it is pathetic and I cant wait to get shot of it.

    1. Anonymous Coward
      Anonymous Coward

      Re: Sucks

      AC for obvious reasons. Warning - contains sarcasm.

      I wondered if we worked in the same part of Capita but then I don't think I've met anyone who would actually say they love their job.

      Completely agree about the shopping spree mentality dragging the company down further, so many critical functions once handled competently by third parties are now only allowed to go through recently acquired internal suppliers who are not fit for purpose and often much more expensive than the previous outside companies.

      The new CTO (not to be confused with the existing Chief Technology Officer) is the latest in a long line of newly-created jobs for old colleague/golfing buddy/school chum <sarcasm> that has been working so well thus far and I'm sure the company fortunes will be turned around in no time.</sarcasm>

  25. Andrew Moore

    Hmmmm...

    "using robots to automate certain parts of the operation"

    I wonder if they could replace Jon Lewis with a robot- think of the massive savings in salary, expenses and perks...

    1. Korev Silver badge
      Coat

      Re: Hmmmm...

      That'd be worth the Wait(rose)

  26. Thoguht Silver badge

    Dividends vs Pensions?

    "Overall, Jonathan Lewis clearly doesn't want to go down in history as another CEO that kept paying out dividends whilst debt keeps racking up, endangering jobs and pensioners alike."

    The whole debate about pension funds vs. dividends seems to be driven now by Labour, with the consensus rapidly becoming "pensions good, dividends bad". Except this (like most of the other stuff that comes out of McDonnell's mouth) completely ignores economic reality because many pensioners are relying on companies like Capita to keep on paying dividends.

    Pension funds aren't big pots of cash that are doled out to pensioners, they are complex investment portfolios that rely heavily on dividend income. Indeed, the lately-demonised offshore infrastructure companies like HICL and John Laing Infrastructure are a mainstay of many a pension fund.

    1. Allonymous Coward

      Re: Dividends vs Pensions?

      A few years ago I was intrigued to learn that the Ontario Teachers' Pension Plan Board is one of the world's largest institutional investors.

    2. nematoad Silver badge

      Re: Dividends vs Pensions?

      ",,,they are complex investment portfolios that rely heavily on dividend income..."

      OK. So that makes them the owners of the company. If they are willing to accept the benefits of ownership it's a pity that they don't seem so keen on the responsibilities. Like keeping the management under control and waving through the so called "incentive plans" the people at the top use to line their pockets whilst letting the rest of the company go to the wall.

      "You scratch my back etc."

  27. Anonymous Coward
    Anonymous Coward

    “That thing you do in house, at cost? We can do it for less, and make a profit on top”

    Capita are clearly a shower of bastards, but anyone gullible enough to fall for that schtick should not be in any position of responsibility in their clients

  28. Why_Not?
    Facepalm

    A company that will never learn

    Having experienced Capita first hand I can honestly say that they stand no hope of correcting things if they carry on the way they do. I can only comment on IT Services or whatever they’re called this week, but there lies the problem. Its all smoke and mirrors put up to instil faith in the company with an aim to keep the group share price from crashing.

    There seems to be a conveyer belt of ‘senior management’ types that come along to put there stamp on the business and give some jobs to the boys along the way. It doesn’t matter if it will fit, just that their idea which they had before coming into the organisation (or learning about it) will get implemented.

    What they need is for someone to come in who hasn’t got their head stuck up there own arse, or the arse of the managers above them! They need someone to come in who takes a look at the business and understands what the business actually is, not just spend tens of millions on best of breed technology because they think it will help sell. Take a look at the business that you have and put in something that fits and then sweat the asset you have! You’re a service provider not an investment bank… Stop spending money you don’t have on equipment that isn’t fit for purpose!!!

    And India… Really??? You still think that’s the way to go. Capita stripped a lot of talent out of the business on the assumption that it was going to be considerably cheaper, its now not cheap and they are so committed that they cant back down. Instead they are hiring back old talent as contractors on 4 times the money whilst haemorrhaging service penalties.

    If you don’t learn lessons from the mistakes you’ve made over the past 8 years then the trend can only continue downward

    1. Stuart 22

      Re: A company that will never learn

      "There seems to be a conveyer belt of ‘senior management’ types that come along to put there stamp on the business and give some jobs to the boys along the way."

      Absolutely! Of the six executive Directors only one is a woman (Company Secretary and I doubt she is on £440k/year). Can't even close their gender gap yet this socially irresponsible company can police how the disadvantaged lead their lives. I guess if they are missing out on half the talent the result is hardly a surprise.

      They need a big PIP up the backside.

      1. BebopWeBop Silver badge

        Re: A company that will never learn

        While I understand and appreciate the sentiment, don’t think that just by appointing women things will change. They can be just as good acting as money grabbing bar stewards (see the sainted Dido) as their male equivalents. https://www.theregister.co.uk/2017/10/18/mps_grill_dido_harding_over_suitability_to_chair_nhs_improvement/

  29. Lotaresco

    How?

    It takes spectacular talent to be in the position that Capita is (was?) and not be coining money hand over fist. They are in the privileged position of being a monopoly supplier to government. Their income is guaranteed and gold plated. They are helped along by a "sympathetic" approach from government ministers who, if one is charitable, one must assume have an eye on becoming a Capita shareholder/director just as soon as they can wriggle free from government.

    As an IT contractor I've seen the Capita coalface where they move in and tell the existing contractors to either take a massive, and I mean massive, pay cut, get opted in to IR35 and be handed a complete crock or leave. I looked at the offer and left. I later found out that although payments to contractors had halved the charge to government had increased. Money for nothing.

    When one has a client that will collude in increasing profitability how can one lose?

  30. Anonymous Coward
    Anonymous Coward

    The real shame

    Sadly, any of these firms can go bust leaving behind damaged pensions and livelihoods. They will simply be replaced by another firm no better than the last until they too go bust. I can hear the city planning for the new Capita/Carillion hydra to make money from.

  31. Anonymous Coward
    Anonymous Coward

    At least you guys are reporting this. If a local corner shop shuts with two jobs lost the press is all over it...all my colleagues get fired and offshored and nobody bats an eyelid...yeah...come work in STEM jobs and be replaced for a short term bonus.

  32. Anonymous Coward
    Anonymous Coward

    How true.

    From their website.

    "We unlock value by applying talent and technology – for you, your organisation and our communities"

    1. Anonymous Coward
      Anonymous Coward

      Re: How true.

      Indeed and it's on the new staff appraisal form too. I think I'm going to puke!

  33. anothercynic Silver badge

    Given how Carillion went to the wall...

    ... With several profit warnings and warnings about projects, when is it Capita's turn?

    I'd be concerned *now*, not in a few months, or once the Chief Transformation Officer gets going... NOW.

  34. Anonymous Coward
    Anonymous Coward

    Missing something

    I'm puzzled. All these consultancies / outsourcers pilloried for overcosting and underperforming and lovely Accenture hasn't been mentioned yet?

    What, you don't have them in the UK?

    1. Alistair Silver badge
      Windows

      Re: Missing something

      @AC "pilloried outsourcing consultancies"

      In many cultures one does not speak of the deities of the underworld for fear of invoking their wrath....

    2. Lotaresco

      Re: Missing something

      "What, you don't have them [Accenture] in the UK?"

      Not only do we have Indenture, but they ran the disastrous NHS Connecting for Health contract until they got bored and abandoned it, blaming everyone else for the failure.

  35. Anonymous Coward
    Anonymous Coward

    Doomed

    Capita is doomed

    You have an organisation that has (hopefully) a non-core process.

    Capita is an organisation that takes an existing process and does it cheaper using knowledge you have and it's own knowledge.

    This will work just fine for a while, but inevitably costs can be cut further by moving the job to $cheaper_country, or innovation.

    The thing is that Capita is uk based and so a company based in $cheaper_country can always undercut the foreign branch of Capita (UK overheads)

    and capita does not innovate - it is a process based organisation.

    Inevitably it will fall behind, one symptom of that is this, as margins get tighter the managers look to get the money back _somewhere_

    The trouble here is that the company is - along with many others - overmanaged.

    Those who do work on assigned tasks 100% of the time. There are a few people who have the job of mining innovation.

    The thing is this is not generally the best way of working. those paid to innovate will not see the small opportunities those at the coal face see - the bread and butter of Capitas existence.

    Anon because...

  36. Anonymous Coward
    Anonymous Coward

    Is it really a good idea to to dispose of "non-core" activities?

    Diversity can help a company survive down turns in its core markets.

  37. Anonymous Coward
    Anonymous Coward

    Speaking of McKinsey...

    My current company just finished a year of consulting with McKinsey. They basically sucked millions of dollars out of us for no perceived benefit.

    Their basic MO as far as I can tell is not to try change how the business is run and fix the basic issues that those of us at the bottom can clearly see. They can't do that because they don't know the business we are in. What they therefore do is simply try to have the business do the same exact inefficient things, but cheaper. Usually by fleecing suppliers and replacing employees with cheaper ones in low cost countries. Somehow executives always avoid this fate...

    Sadly most companies and government appear to be run exactly the same way - the incompetence always rises to the top and when they eventually get fired they just move on to the next large company. (it has to be large as they'll get found out quickly in a small company!).

    For those interested (and yes this is a plug for him), my colleague wrote a novella about us:

    https://www.amazon.com/Five-Quintessential-Stages-Completed-Project/dp/1483953432

    It's a short read, but basically describes every public company these days , and most local governments too!

    Anon for obvious reasons.

    1. HmmmYes

      Re: Speaking of McKinsey...

      Really?

      They have several million dollars in cash from you.

      All hey had to do was send some high scoring s grads from Oxbridge, create some slides, use the dumb language - TaDah! Profit!

      What were you expecting from a Management constancy FFS?

  38. Lotaresco

    The glitter has fallen off

    Capita's business model of rolling faeces in glitter is coming unstuck as the faecal matter dries out and the glitter falls off. It has taken a long time. The comments on the recent register article about Capita's failure to deliver the Recruiting Partnership Project showed that there's a high level of awareness among contractors about how bad things were with Capita, but government has chosen to ignore all of the warning signs. Weirdly contracts have been awarded to Capita even though previous experience has shown that they have no experience in that area of work (as with the Recruiting Partnership Project) and no real hope of success.

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