Birmingham City Council’s decision to reverse controversial plans to ‘lift and shift’ 100 back office IT jobs to India has raised doubts into Capita’s ability to drive £135m efficiency savings from its Service Birmingham joint venture.
The council is discussing a number of practical issues and contractual commitments with Service Birmingham, which employs 1,100 staff, with a view to reaching agreement as to how to discontinue the offshoring initiative.
Welcoming the council’s decision not to offshore, Labour deputy leader, Ian Ward, questioned whether the move ‘will have any impact on the savings that were expected to be delivered by the contract with Capita’.
The news comes at a time when Capita is claiming buoyant activity in local government which has helped the BPO player match its bid pipeline to equal record £4.7bn levels.
Posting £1.1bn contract wins and renewals in its half-year report, more than twice the value recorded in the first half of 2010, the outsourcing giant cited a collaborative partnership with the Lambeth LBC among major wins. Currently preferred bidder, the Lambeth deal contains provision to significantly widen the contract’s scope for delivering services from £60m to a maximum £300m and drive further efficiencies by involving other third party suppliers.
The group notes councils are procuring in different ways which permit partnerships with mutuals, third sector bodies and SMEs. This, the company claims, reflects its responsiveness to Spending Review cuts and changes, heralded by the recently published Open public services White Paper.
The recent award to Capita Hartshead of the contract to act as single provider to a London-wide Local Government Pension Scheme (LGPS) framework, primed by Hammersmith and Fulham and Brent councils, represents, it says, an example of innovative measures local authorities will use to cut administration costs while protecting frontline services.
Paul Pindar, chief executive of Capita, said the statement ‘reflects the increasingly-strong demand for outsourcing across the public and private sectors after a two year period of subdued sales activity.’
