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By | Paul Kunert 1st October 2012 13:57

Capita UK offshoring plan killed by customer backlash - insiders

It wasn't the threat of strike that forced its hand

Unite claimed victory over Capita IT Services' (ITS) decision to tear apart its offshoring blueprint, but company insiders claim that much more pressure had been imposed on management from customers who objected to the move.

The union threatened industrial action in August over Capita's move, first proposed in March, to put 1,000 staff at risk of redundancy, including the service desk team whose roles were to be farmed out to India.

But earlier this month the integrator-cum-reseller ditched those plans. At the time, Unite said "members' determination" to defend their jobs caused a re-think from Capita. Not so, say company insiders.

The Channel's sources said that while Unite certainly put pressure on execs at Capita with a tacit threat of organising members across the entire group, the antipathy towards offshoring displayed by certain key customers was actually the determining factor.

One source said: "Many clients refused to allow the offshoring. In particular Capita Life and Pension Services (CLPS) and Capita Financial Services (CFS) blocked it because many of their contracts prevented any part of their service to the end client being off-shored".

CLPS includes customers such as Prudential, AXA and Royal London while CFS works mostly with share-dealing businesses.

Several public sector customers also took exception to the offshoring, said our insider, alleging that these included the DVLA and Driving Standards Agency.

"Capita ITS's customers refused to allow their business [IT operation] to be offshored. I suspect that is what stopped the programme, not the threat of a strike," said our Capita man.

Another insider said negative feedback was discussed at customer meetings: "[Proposed offshoring caused] quite a furore," he said. "It wasn't that the union said 'no'."

Both Capita ITS chief exec Mark Quartermaine and his number two Russ Hewitt – who were known to be steering the cost-cutting programme which included the offshoring plans – have left the firm in recent months.

Between 50 to 100 workers are understood to have exited Capita through the compulsory redundancy programme, which sources say missed numerous deadlines and came shuddering to a standstill last month.

Capita, which last month confirmed it had concluded the consultation programme, told The Channel it had no further comment. ®

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