Profile: Gordon Hurst, FD of outsourcing company Capita

Gordon Hurst

Capita, the business process outsourcing company, is undoubtedly a British
success story. Spun out of the accountancy profession 19 years ago (it was
initially part of CIPFA), it has grown to become a FTSE 100 company, and
essentially, one of the largest consulting and outsourcing companies in the
world.

Yet it is probably best known in the public imagination, more than anything
else, through the pages of Private Eye, and a series of stories pointing to
‘cock-ups’ and terming the company ‘Crapita’. But Gordon Hurst, group finance
director, isn’t fazed by the ridicule.

‘It’s something that goes with the territory. If you are doing something
which is big and high profile and new and may not be that popular with the
public you are putting yourself up for that. You are going to have a higher
profile. With what we are doing we are implementing whatever policy our customer
has got. Sometimes they get confused thinking it’s all our fault,’ he says.

Still, it seems unlikely the company will ever have an entirely positive
public image. Being the IT brains behind things like the congestion charge, it
is always likely to be resented by those having to pay the bills it distributes.

And despite what critics say, Capita is not just proud, but immensely proud
of its achievements, particularly the scheme that drastically cut London
traffic. ‘It was an incredible feat to do the congestion charge. It was the
largest IT project in Europe that has gone in on budget and on time.’

The date for implementation ‘never moved,’ he adds. A point that is
definitely something to boast about in a world of constantly moving deadlines
where public projects are concerned.

‘We have the ability now to go to a client and say we achieved that, to take
our customers round the sites we have running the congestion charge call centres
and administrative centres. It’s a brilliant operation to show people. Our team
has done fantastically,’ he enthuses.

Turnover last year at Capita was £1.4bn, a 12% increase on the previous year.
Pre-tax underlying profit from continuing operations was £177m. The share price
at the time of writing stood at around 450p, valuing the group at just under
£3bn. Not bad for a company coming out of an accounting institute and
specialising in bits and bobs of local authority consulting.

Acquiring growth

Capita got to where it is, he says, through small incremental steps. ‘The
consultancy was of a very short term nature, a hand to mouth existence. So we
started to provide services of a long term nature, getting more long term
contracts. Also, consultancy meant writing reports. We thought it would be a
good idea to do them, to implement the ideas.’

The first big IT outsourcing deal was with Berkshire County council, worth
£2m a year. ‘It was a ground breaking thing. It’s difficult to get into these
things.’

One thing led to another, and the company decided it could use its public
interface in the private sector, too.

‘We were doing administrative things like collecting council tax and managing
benefits claims. We thought if we can do that in the public sector, we ought to
be able to do that in the private sector, ie. handle a claim, administrative
function or IT system.’

Capita initially bought its way through acquisitions into private sector
activity. The rest has been a story of huge growth in outsourcing – an
increasingly popular way for businesses and the public sector to reduce
overheads.

From 30 people in 1987, just before Hurst joined, Capita now employs 36,000
people. It still has a big IT business, though IT contracts for customers only
account for 20% of revenues, he says. There is a neat 50/50 split between
private and public sector work. The market, he adds, is ‘going fantastically’.

Analysts from technology consultancy Ovum estimate a growth in business
outsourcing of 12% a year between now and 2009, looking at a total market
potential of £95bn a year. Not only is the market set to grow, he insists, it
ought to grow, too.

‘There’s obviously a push from government and Treasury for the public sector
to be well managed and efficient. The public also wants to see public sector
activities run better. I think with outsourcing now pretty prevalent for 10 or
15 years in various forms to some extent if a public sector organisation isn’t
even considering it, they are not going through all the options they could and
should be looking at.’

Consistent success

Hurst himself has spent most of his career at Capita. Trained at Coopers
& Lybrand, he worked briefly for Sun Microsystems before joining Capita in
1988. He was a financial controller initially, made commercial director, joining
the board, in 1995, and stepped up to group FD in 1996.

He had worked for both Coopers and Sun outside the capital and ‘having sworn
I would never work in London,’ has now worked in the capital for most of his
working life. Hurst, and Capita in general, seem strikingly modest about what is
going on. In a comment that says a lot about Hurst, he says that he has to pinch
himself when thinking about how well things have gone, finding it difficult to
believe.

The same theme emerges when talking about any ambitions Capita might have to
climb the FTSE ladder. ‘We are not driven by ambitions of that nature. We want
to get bigger and better but in a safe and sensible fashion. If you set
objectives driven by outside factors in some way, you can easily get drawn into
something which could be detrimental,’ he says. Capita, it seems, just wants to
get on with things and not worry about its relative performance.

One striking thing about the company, not least on the evidence of Hurst
himself, is the continuity at the top. Rod Aldridge, currently the chairman, was
managing director of CIPFA computer services when the management bought it out
in 1987. And Paul Pinder, the current chief executive, joined shortly after
having advised on the MBO.

‘The core management team has stayed together for a long time. You can build
a culture of an organisation that really reflects the way you ought to do
business. That stability has obviously been a major part of the group’s
success,’ says Hurst.

Aldridge, of course, will soon be leaving the group, in another example of
Capita attracting unpleasant headlines. He made a £1m loan to the Labour party,
and stepped down amid allegations the financial assistance was intended to curry
favour with politicians who might be expected to procure Capita’s services.

‘He is still knocking around – he was in here yesterday. It’s going to be
different [without him]. Paul and Rod have worked together for the last 19
years. It’s a shame that it happened that way. But from a practical basis for
Capita, Rod has been taking a far more ambassadorial type of role anyway. It’s
not really possible for someone like Rod to be involved in a detailed way in the
business or in bids. We have got our big ticket bid team who have the main
relationships. It’s not going to really impact how we operate,’ Hurst says.

‘It’s a shame. He is a fantastic bloke. He was gutted the way his personal
decision came out and portrayed things in a way nowhere near like the true way.
It’s a great shame he had to step down for the good of the company.’

Aldridge will be around until the end of July, and Hurst speculates,
insisting that it’s really for Aldridge to say what he will do next: ‘He will
keep busy doing things where he is going to add value to society. He’s not going
to retire on a beach.’

How do I get there?

How do you get to be a FTSE100 finance director, and not just that, but one
in a thriving company?‘ The thing that I think has always been the most
important thing to be doing, at Capita in my case, is to be making sure the team
you have got around you are a good team and that you have got enough of them,’
says Hurst.

‘You don’t want to slip into thinking “I can do everything myself. ”You need
to make sure you give yourself enough time not only for thinking but to
anticipate, to get on top of areas you need to get on top of and not to be
driven by events.’

Have there been any key moments in his career he would select as important,
as having changed its direction or been critical to his achievements? ‘It’s
difficult to pinpoint things. We have built up and grown Capita through a series
of incremental things – small or bolt-on acquisition things. It’s very difficult
to define an event.

‘The milestone events within Capita have been when we did something that put
us on another level. When we first won the contract to run the theory driving
test, for instance. That was the first time we really got involved in a green
field start up. It means our capabilities are greater.’

As an FD that also means recognising when you have stepped up a level, and
seeing that you can’t do a lot of the things you used to do.

He plays down any ambitions to be chief executive and seems pleased simply to
be where he is.‘[Capita] is our baby. We will carry on doing this for a bit.’