Capita In Crisis: Bring All Outsourcers Back In-House

Shares in outsourcing giant Capita have collapsed following the company’s profit warning to shareholders. This follows shortly after its competitor Carillion sank into liquidation, and underlines further the fragile state of British capitalism.

- Leo Marsden

Shares fell by more than 47%, resulting in enormous profits for hedge funds who had sold them ‘short’ - essentially betting on misery for Capita’s workers and small business suppliers. Shares in Serco and other outsourcers also fell significantly, reflecting a wider malaise.

Despite the collapse, the company appears to have avoided bankruptcy, with emergency measures to halt dividend payments and issue £700 million in additional shares. Management is also drawing up plans to ‘cut costs’ - no doubt meaning attacking workers’ jobs, pay and conditions.

This may provide bosses temporary respite - at the cost of the workers who make them their money. But it will not solve the problems of a company with over £1 billion of net debt suffering from decades of underinvestment.