Spotlight – Capita leaps ahead

If outsourcing has been among the business success stories of the 1990s, the Capita Group has been about the sector’s most successful exponent.

According to this year’s Sunday Times Rich List, chairman Rod Aldridge OBE has a personal fortune of £39m, which makes him – on paper, at least – Britain’s 659th richest person.

Not bad for a former public-sector accountant who led a successful management buyout of the computer services arm of public-sector institute CIPFA in 1987 to form Capita.

Aldridge will announce the company’s half-year results next week, figures that are expected once again to show strong growth. Announcing a 48% rise in annual profits to £27m pre-tax in February, Aldridge said he could not see the outsourcing industry’s phenomenal growth rate slowing.

Capita has capitalised better than most on the public-sector boom in contracting out, fuelled by the last government’s introduction of compulsory competitive tendering rules and driven ever upwards by the current government’s best-value policy for councils.

Capita now operates more than 100 large-scale contracts, though the group is no longer just concerned with outsourcing. It also provides human-resource services, payroll and pensions, recruitment, financial services and property services which contribute around 16% of the group’s revenues.

Although Capita works across the public sector and, increasingly, in the private sector, it is the local authority market that Aldridge knows best. He spent ten years in local government before joining CIPFA in 1974.

Ten years later, he became managing director of CIPFA Computer Services, renamed Capita after 1987’s management buy-out.

Under Aldridge, Capita has grown over the last 12 years from a business with a staff of 33 to a FTSE-250 company with more than 5,000 employees based across 80 sites. And that rate of growth is not expected to slow significantly in next week’s figures.

Capita expects the outsourcing market to grow from £3bn in 1997 to over £6bn by 2001.

As Aldridge said in last year’s report: ‘The board of directors is confident that shareholders will be very satisfied with Capita’s results for 1999.’

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