British outsourcing company Capita (CPI.L) announced its intention to trim its global workforce by approximately 900 employees as part of an ongoing effort to reduce costs, primarily focusing on indirect support and overhead roles.
The decision, unveiled on Tuesday, impacts less than 2% of Capita’s workforce, which comprises around 50,000 individuals across various locations including the UK, Europe, India, and South Africa.
Despite these workforce adjustments, Capita stated that its current performance aligns with its expectations.
These job reductions form a vital component of Capita’s strategy to achieve significant cost reductions and double its profit margins in the medium term.
Jon Lewis, the CEO who intends to retire by the end of the year, emphasized the company’s commitment to identifying additional cost-efficient measures throughout 2024.
Capita, a provider of services to both the public and private sectors, has faced significant challenges in the past year, notably a costly cyber incident that occurred in March.
The company is now preparing to engage in consultations with its employees regarding the job reduction program.
The reorganization initiative is anticipated to generate annualized savings of £60 million (approximately $75 million) starting from the first quarter of 2024, surpassing the company’s previous goal of £40 million in cost savings.
This represents a substantial step toward achieving Capita’s objective of bolstering its profitability.
In response to this news, Capita’s shares experienced a 5% increase in early trading, suggesting that investors may be viewing these cost-cutting measures as a positive step towards strengthening the company’s financial health and future prospects.