The slowdown in the UK economy — reinforced by the number of profits warnings being made — is actually boosting the fortunes of the engineering, construction and other companies which moved into facilities management some years ago.
Other companies, facing reduced order books and sales, are turning to facilities management companies in order to cut their overheads by contracting out services.
Facilities management group Capita, which supplies back office, human resources and IT services, is one such company currently benefiting from the cost cutting campaign.
Capita is gaining ground from the outsourcing boom in the private sector, revenues from which account for just under 50 per cent of the total revenues in the first half.
Capita's total pre-tax profits are up 52 per cent in the first half of its year to £20.9m. Turnover increased 55 per cent to £323m. The economic downturn is pushing more companies into outsourcing administrative operations to concentrate on their core businesses.
Capita gains (two)
The Labour government's penchant for private sector outsourcing has also proved a boon for Capita. Government work has shown revenue growth of more than 50 per cent.
Chief executive Paul Pinder said: 'The government has made it clear that it will continue its programme to modernise public services and that it sees a significant role for the private sector for the delivery of that programme.'
He also said that Capita estimates the size of the market it operates in at around £50bn a year and is recruiting another 2,000 staff to bring its workforce to 14,000.
Discussions with government officials suggest that Labour will accelerate the pace at which it involves private operators during its second term.
Capita gained £722m in new contracts in its first half — more than the total for the whole of 2000 —beating its own internal forecasts comfortably. Turnover for the full year should come in at £690m and Capita is bidding for projects worth £1bn, hoping to win as much as half of that work.
Source
The Facilities Business
