Local authorities dispute Capita claims

Local authority sources have poured cold water on claims that the IT outsourcing market could soon be worth £30bn.

Local authority sources have poured cold water on claims that the IT outsourcing market could soon be worth £30bn.

Paul Donovan

They 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.

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