Local authority sources have poured cold water on claims that the
IT outsourcing market could soon be worth £30bn.
Paul DonovanThey were reacting to an assertion made by Rod Aldridge,
executive chairman of outsourcing company Capita, in the firm's
annual report.
In his statement, Aldridge said, "Our core markets of local
government, education, central government and the private sector
continue to offer a myriad of opportunities. Indeed, we believe
that our addressable market in the UK will be worth £30bn per annum
within three years."
In recent years Capita has been particularly prominent in
winning local government contracts. Over the past year it has
renegotiated housing benefits contracts with Westminster and the
London Borough of Bexley, netting itself another £10m in
revenue.
However, Danny Friedman, head of research at the National
Housing Federation, said, "Some local authorities are having second
thoughts about outsourcing services like housing benefit due to
past experiences."
A spokesperson for Lambeth council in London stated, "Capita are
running the housing benefit system but we have been reviewing it
with outside consultants and are considering taking the work back
in house."
Anthony Miller, an analyst at Ovum Holway, said the Capita view
of a growing tendency toward outsourcing was correct: "Capita began
with outsourcing of local government and then moved on to central
government and the commercial sector," said Miller. "I agree with
their view that outsourcing in the public and private sectors can
only continue to grow."
This year, Capita has also won contracts with Birmingham City
Council, Canterbury City Council, and the London Boroughs of Camden
and Haringey, which involve the collection of council tax,
non-domestic rates and road traffic debts.
In the year ended 31 December, Capita made profits of £53m, up
46% on the previous year on sales of £453m, up 39% on the previous
year.