Capita

Capita plc, a UK-based business process outsourcing and professional services company with approximately £3.5 billion in adjusted revenue (2019) and over 50,000 employees, was struggling with a legacy of acquisition-driven fragmentation and weak governance. The company had grown through more than 100 acquisitions into a sprawling conglomerate with multiple overlapping business units, inconsistent management practices, and limited visibility into contract-level profitability. A January 2018 profit warning — during which shares fell approximately 40-47% in a single day (early intraday figures cited 35% at market open; the close-to-close decline was approximately 40%, with the full-day market capitalisation reduction of approximately 47% per MSCI/Wikipedia sourcing) — exposed the depth of the problem. The share price had declined over 80% from its peak. Reported operating profit collapsed to just £0.4 million in 2019, and the company reported pre-tax losses of £62.6 million that year. Management acknowledged that years of acquisitive growth had left the organisation without a coherent operating model.

Jonathan Lewis, appointed CEO in December 2017, launched a multi-year transformation plan in January 2018 centered on organisational simplification and governance restructuring. Key actions included:

• Divisional restructuring: In April 2018, replaced the fragmented business unit structure with six clear divisions — Software, People Solutions, Customer Management, Government Services, IT and Networks, and Specialist Services — each with defined P&L accountability. By 2020, further consolidated to two core divisions (Capita Public Service and Capita Experience) plus a Portfolio division of non-core businesses earmarked for disposal.
• One Capita operating model: Introduced a standardised operating model company-wide, replacing ad-hoc practices inherited from acquired businesses. This included common reporting frameworks, standardised management processes, and unified leadership accountability.
• Cost competitiveness programme: Executed systematic cost reduction targeting management layers, IT consolidation, and property rationalisation. Achieved £70 million in savings in 2018, reaching a cumulative £175 million by end of 2019 (meeting the original target), and £305 million in cumulative sustainable savings by end of 2020.
• Portfolio disposal programme: Identified and divested non-core businesses to reduce complexity and fund debt reduction. Disposed of Education Software Solutions (£298.5 million proceeds), Eclipse Legal Services (£56.5 million enterprise value; £58.4 million gross proceeds, £53.2 million net of intercompany balance, per 19 June 2020 RNS announcement), and other operations.