Capita raises cost-saving target as it turns to AI to drive change
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Outsourcing firm Capita has unveiled fresh cost-cutting plans worth £250 million as it targets savings from the use of artificial intelligence (AI) and staff leaving voluntarily. Shares in the firm were down by a tenth on Tuesday after it hiked its savings target from a previous £160 million.
Capita is a major contractor for the Government and local authorities, and also manages the licence fee for the BBC and runs recruitment for the British Army. The company said it had spotted more opportunities to cut costs and make the organisation more efficient.
Part of this is set to come from it ramping up the use of AI, including generative AI, to speed up certain tasks. This includes the use of AI for its contact centres and local government customers, which has already resulted in average handling time reducing by around a fifth, Capita said.
It also revealed early signs that adoption of the technology had helped it to win new customer contracts. Furthermore, Capita said it sees voluntary employee attrition – meaning when staff choose to leave the company – of about 21% each year. This reflects the natural movement of people such as in call centre support roles where there tends to be a higher average turnover.
But Capita said it will help contribute to its savings target, reducing the need for redundancies and ensuring it can balance the level of new hires. It is understood that the firm could decide not to replace about 1% to 2% of roles after staff leave. Last year, it announced plans to cut around 900 jobs as part of the cost-reducing plan.
