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Outsourcing delivers big growth

publication date: Mar 2, 2008
author/source: Ed Tranham
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Serco and Capita both delivered strong revenue growth in 2007. At Serco, revenues increased 10.3% to £2.811bn with adjusted profit before tax increasing 17.3% to £123.2m. 2007 revenues at Capita were up an above-consensus of 19% to £2.073bn, as were profits before tax at £238.4m. Capita expects the outsourcing market – of which it has a 22% share – to grow at 10% over the next three years.

Neither company has published any detailed information on their education businesses. However, we believe that Serco is likely to retain the Education Walsall contract despite tough competition from EduAction – the JV between Nord Anglia Education and Amey.

In one area where both companies face each other, School MIS, Serco’s Facility product continues to make slow progress in gaining new adoptions from local authorities and schools as Capita works hard to retain its dominance of this market segment. We believe that Facility has around 700 school installations in the UK.

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