Capita

Capita plc, a UK-headquartered business process outsourcing and professional services company, had grown through over 100 acquisitions into a sprawling conglomerate with approximately £3.5 billion in revenue (2019) and over 60,000 employees. The company operated through ten separate divisions, each with its own leadership team, finance function, HR department, IT systems, marketing team, and office footprint. This fragmented structure meant that corporate G&A costs were duplicated across multiple business units — ten sets of finance directors, ten HR teams, ten marketing functions — creating an overhead burden disproportionate to the company's revenue base. Operating profit fell 56% to £111 million in 2020, and pre-tax profit sank 67% to £65.2 million. The company's 294 properties across the UK and internationally represented a significant fixed cost base, many of which were underutilized following the shift to remote work during COVID-19.

Between 2020 and 2022, CEO Jon Lewis executed a systematic organizational simplification program:

• Division consolidation: Reduced the organizational structure from ten divisions to two core divisions — Capita Public Service and Capita Experience — eliminating eight divisional leadership teams, their associated overhead structures, and the management complexity of running ten P&Ls. Each eliminated division had carried its own managing director, finance director, HR lead, and support staff.
• Property footprint reduction: Temporarily closed 168 of 294 properties during COVID-19, then made many closures permanent. The company consolidated from nearly 300 locations to a significantly smaller footprint, realizing £10 million in variable property cost savings in 2020 alone, with ongoing annualized savings as leases expired.
• Headcount optimization: Achieved £48 million in staff-related savings in 2020 through the elimination of duplicated management layers and support functions across the former divisional structure. Senior management layers were compressed from four or five levels to two or three.
• Discretionary spend reduction: Cut £64 million in discretionary expenditure including external consulting fees, travel, sponsorships, and non-essential professional services that had accumulated across ten independently managed divisions.
• Asset disposal program: Divested non-core businesses generating total proceeds of £388 million by 2022, allowing management to focus G&A investment on the remaining core operations rather than spreading overhead across a diverse portfolio.
• Shared services consolidation: Centralized finance, HR, procurement, and IT functions that had previously been replicated across divisions into unified shared services teams, eliminating role duplication and enabling standardized processes.

• Total savings: Achieved £122 million in total savings in 2020 alone, comprising £64 million in discretionary spend, £48 million in staff costs, and £10 million in property costs.
• Structural simplification: Reduced from ten divisions to two core divisions by 2022, eliminating eight complete divisional overhead structures.
• Disposal proceeds: Generated £388 million from the disposal of non-core businesses, reducing portfolio complexity and associated G&A burden.
• Return to profitability: The company returned to profitability following the restructuring, with improved contract profitability and bidding discipline enabled by the simpler organizational structure.
• Restructuring cost end: Restructuring costs broadly came to an end in 2021, meaning the G&A savings became fully recurring without offsetting one-time charges.
• Timeframe: Primary restructuring executed 2020-2022, with the most significant organizational changes completed by end of 2021.

• CEO Jon Lewis (appointed 2017) had the board mandate and tenure to execute a multi-year restructuring that a shorter-tenured CEO might not have attempted
• COVID-19 provided both the urgency and the cover to accelerate property closures and discretionary spend cuts that would have faced internal resistance in normal times
• The company's acquisition-driven growth history meant that many of the overhead duplications were obvious once leadership committed to simplification
• UK government contracts (Capita's core market) provided stable recurring revenue during the restructuring, allowing the company to cut costs without facing a simultaneous revenue crisis