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CAPITA SEEKS SCHOOL CONTRACTS

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Capita, one of the largest outsourcing groups in the UK, is this year hoping to win contracts to administer schools...
Capita, one of the largest outsourcing groups in the UK, is this year hoping to win contracts to administer schools, according to The Financial Times (p24).

The group, which already derives 14% of turnover from education, mostly through information technology operations, is discussing with councils about taking the administrative load off head teachers.

Announcing a 35% jump in pre-tax profits to£14.1m, the group said it believed cost pressures in the education system would force change. Rod Aldridge, executive chairman, said the outsourcing boom was continuing unchecked - with 28% of the profits improvement coming through organic growth.

Mr Aldridge said first-half growth had been strong across all sectors, with local government particularly buoyant. The group is investing£2.1m in a national computer call centre in Coventry to support its local government operations.

Turnover in the six months to 30 June increased from£117.9m to£150.2m, with an£8.76m contribution from acquisitions.

Commenting on the news, The FT says setting up a call centre is more important than it sounds. The group already has a huge head start in providing services to local government. Pulling its own back office into operations together will lead to big cost savings which it can pass on to clients, so reducing pressures at the time contracts are renewed.

At one stroke the barriers to entry for other participants become higher still. It concludes that, with just 10% of local authorities having dabbled in outsourcing, there is plenty more growth to go for.

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