The new CEO of Capita, Adolfo Hernandez, has pledged to swiftly reduce costs after the company recorded a £107 million loss in 2023. Capita, a major recipient of government contracts and one of the UK’s largest employers with a workforce of 43,000 employees, provides essential staff for various government functions, including significant NHS support.
The company incurred a loss of £106.6 million as its revenue declined to £2.8 billion, primarily due to a major cyber-attack during the year. Hernandez, who succeeded Jon Lewis at the beginning of the year, expressed optimism about Capita’s potential and highlighted areas where value could be unlocked. However, he acknowledged that operational excellence has yet to be achieved to lay the groundwork for future growth and shareholder benefits.
Hernandez outlined plans to focus on precise execution, collaborative solution development with clients, and the accelerated adoption of technology. Despite the progress demonstrated in the 2023 financial results, he emphasized the need for further improvements in operational and financial performance.
In pursuit of cost reduction, Hernandez indicated significant cuts are in the pipeline, without specifying whether job cuts are imminent. Labor expenses constitute a substantial portion of Capita’s cost base, raising concerns about potential workforce implications.
CEO Adolfo Hernandez emphasized the urgency of achieving a swift reduction in Capita’s cost base, affirming the company’s commitment to delivering a net £60 million in annualized cost savings from the first quarter of 2024, as previously announced in November. Additionally, he revealed plans for further significant efficiency improvements totaling £100 million, aimed at enhancing Capita’s competitive position.
These efficiency measures coincide with Capita’s announcement of 900 job cuts towards the end of last year. While Hernandez did not specify whether additional job cuts are anticipated as part of the newly announced efficiency improvements, the company’s focus on cost reduction suggests potential implications for its workforce.