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By | Paul Kunert 2nd December 2011 15:42

Capita signs £560m deal with BBC

Auntie spends big to make savings

The Beeb has signed a £560m eight-year deal with Capita to manage TV licences, deploying tech and analytics in a bid to cut costs and boost revenues.

The renewal of the previous gig £500m gig signed in 2002 comes as Auntie faces pressure from government austerity measures, with the licence fee frozen until 2015 – which represents a 16 per cent cut in real terms.

The integrator, which itself is going through a cost-cutting process in the IT Services division, will "re-engineer the current service delivery model and harness advances in technology and analytics to increase TV licensing revenues collected".

It will also aim to cut current serving costs by £220m over the life of the contract, which kicks off from 1 July. Capita will work with iQor UK Ltd to integrate its cash payment service and CSC will continue "modernising existing IT systems".

Paul Pindar, Capita Group CEO, said the contract was "helping to drive down [TV licence fee] evasion and increase revenues collected".

The contract's value is the equivalent of 385,000 people's £145.50 licence fee.

BBC CFO Zarin Patel claimed the deal "represents great value" for the licence-fee paying public.

"Recent efforts by the BBC and TV Licensing to encourage people to pay via Direct Debit and use self-serve channels such as the web has enabled us to re-structure the new contract to realise the savings benefits," she said.

TechMarketView analyst John O'Brien said the BBC contract was one of two must-win deals for Capita, which saw sales fall below expectations during the first half of 2011, rising just 3 per cent to £1.4bn.

The other big deal is the £400m Criminal Records Bureau contract that was extended for a further year in August and is due to run out by March 2012. ®

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