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By | Paul Kunert 2nd April 2012 12:14

Capita job cuts, offshoring 'driven by expectations', says MD

Union rattles strike sabre as management gets out chopper

Capita IT Services (CITS) boss Mark Quartermaine told staff the rapid expansion of the group through acquisition and more recently a slow down in sales led to the redundancy programme.

As exclusively revealed by The Register, the public sector IT supplier informed 1,000 staff - more than 26 per cent of its total workforce - that their roles were at risk with 400 individuals likely to get their P45s.

Staff in back office functions have entered into a 30 day process as of 30 March and some service desk workers, whose positions look likely to be filled by Capita's operation in Pune, India are going through a 90 day process.

In a conference call with workers on Friday afternoon - attended by El Reg - CITS managing director Quartermaine, who joined the firm in February gave the rationale for the job cuts.

He said over the last three years the firm has "doubled in size" through acquisition, sucking in other IT capabilities from the group and organic growth.

"The speed of that activity and the challenge of integrating those acquisitions has caused some inefficiencies and asked questions of us to review the way we deliver those services and whether we can become more efficient," he said

This led to the Unity programme kicking off last year, a "fundamental redesign of the core business operating model" which threw up a new organisational structure around five business units and a requirement to cut the cost of service delivery.

"All these changes mean we are able to identify where we require fewer roles in the organisation but on top of that [against] the backdrop of a very competitive and dynamic market we also need to look at our cost base," said Quartermaine.

"The reality is our performance both last year and in the first quarter this year is not meeting the business expectations and if we don't do something about that now the gap between our performance and expectations of a business like this will continue to widen," he added.

CITS kicked off a voluntary redundancy programme in November but only found 60 candidates willing to jump rather than be pushed.

The firm also initiated austerity measures earlier this year including shelving bonuses, freezing salaries and cutting expenses including travel and subsistence.

Quartermaine said it has decided "migrating work to our existing operation in Pune" and "selective rationalisation of roles by function and or location" is the necessary course of action.

A major programme of "rationalising and improving discounts with our suppliers" and "addressing our use of contractors to significantly reduce that area" is also underway.

Quartermaine confirmed 1,000 roles are covered by the consultation and "we expect up to 400 redundancies to happen as a consequence of that".

"Over two third [of the organisation] will not be affected by this at all and that is important to understand because it is important that people are able to get on with their jobs, focus on what we need to do and move forward," he said.

"I do appreciate this is a very difficult message, we are asking a lot of people, people are working very hard and there is lots of change going on at the minute. But this is all about change we have to change and rightsize as an organisation if we are going to be successful going forward and create a sustainable business."

Union Unite has weighed into the affray, condemning the proposal to export jobs and has refused to rule out an industrial action ballot, claiming strikes could hit customers including Prudential, Royal London and Phoenix.

"Our members will be angry and concerned at the prospect of losing their jobs in the current economic climate. Capita is a highly profitable company and to treat loyal and highly skilled workers in this way is deplorable," said David Fleming, Unite national officer.

"We will work to protect our members' interests during the 90 day consultation period but strike action will inevitably be on the agenda as we talk to member in the coming sees about how the unpin should respond to this attack on their livelihoods," he added.

The government made it clear last year that it supported HP's decision to shelve plans under which IT support jobs assisting a Department for Work and Pensions project would have moved to India.

Employment minister Chris Grayling said he had asked contractors "to find a way to work in the UK", adding "we are exploring how future offshoring can be minimised".

The Capita support roles being sent to India are not directly involved in a public sector project but The Reg sought comment from government as Capita is a top 20 public sector IT supplier.

The Cabinet Office passed us to The Department for Business Innovation and Skills which claimed offshoring was "down to individual company planning", before sending us to the Department for Work and Pensions.

DWP is looking into the matter for us and we will update should a comment be forthcoming. ®

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