Capita's strong start to 2006 includes BBC's 10 year HR outsourcing contract

Capita's strong start to 2006 includes BBC's 10 year HR outsourcing contract

01 Mar 2006 | (News)

Capita has won a 10-year BBC HR services contract estimated to be worth over £100m, beating other shortlisted providers Accenture and Xchanging to win the deal.

The deal means Capita will work closely with BBC People, the department responsible for the BBC's people strategy, to deliver many of the BBC's HR services across the corporation. The service center for the new arrangement will be located in Belfast, Northern Ireland, currently one of the Capita centers for BBC activity. Around 260 jobs will be transferring to Capita and 100 new jobs will be created in Belfast.

The BBC expects to save in excess of £50m over the life of the contract.

Under the new contract Capita will deliver a full range of HR services to the BBC including recruitment; the administration of pay (excluding pensions); some aspects of staff development; occupational health and other services. The contract with Capita is due to become operational from April 2006, subject to contract signature.

Capita is an existing strategic partner for the BBC and already provides a range of services including licence fee collection.

The outsourcing decision follows an internal review, Value for Money, in 2004. The corporation hopes to save around £355 million a year by 2008, an estimated £93 million of which is to be made through more efficient procurement and £68 million from redundancies and increased outsourcing of jobs.

2006 has been very kind to Capita

The BBC contract is not the only major contract that Capita has bagged in 2006. Capita has signed a total of £360 million worth of new contracts and extensions in January and February.

Capita signed a contract with the British Department of Trade and Industry, and has extended its business with consumer electronics group DSG International through a £120 million, seven-year agreement. It also confirmed that it has no material contracts - those having annual revenue of more than 1% of 2005 turnover - due for renewal this year.

The strong start to 2006 follows a year in which Capita reported a 19% gain in pre-tax profit to £177.2 million, on turnover rising 12% to £1.4 billion. Its operating margin increased from 12.5% in 2004 to 13.3% in 2005.

Capita invested further in its offshore BPO capabilities in 2005, establishing a second business center in Mumbai of  50,000 sq ft, with a further 50,000 sq ft under option. The company's total potential space in India is now 120,000 sq ft, with a seat capacity of over 1,250, although it currently employs just 400 staff in Mumbai, servicing five clients.

Some 2,000 employees joined Capita through 2005, raising its headcount to 25,000 across the UK, Ireland and India.

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