Capita hit by spending cuts
If anyone is going to gain from the cuts it’s the outsourcing companies, but even they are taking a hit. At the beginning of the month Serco got into trouble for trying to pass on their government ‘cashback’ to subcontractors; this week Capita surprised their investors with an announcement that the cuts would hit their profits for the second half of the current year.
Markets did not take kindly to the news that “pressures on public spending … will subdue revenue growth in the second half of the year more than previously anticipated.”
Shares in the company fell yesterday and again today, though most analysts expect they will recover eventually. The company’s line seems to be that the cuts will hit the quality of services, not their profits.
Now there’s a reassuring thought.