Capita was the leading supplier of ICT services to local government last year, with revenues of £539m from the sector, according to new research.
Local government sales made up around a third of the company’s £1.59bn revenues from the public sector during 2013, according to the research by technology research company TechMarketView.
That figure was an 11% rise over the previous year, and helped Capita push HP off the top of the list of suppliers to the public sector as a whole.
HP suffered a drop of 10 per cent in its revenue from the UK public sector to £1.48bn during the year.
The report said: “Capita benefits from its focus on business process outsourcing, an activity far less impacted by the Cabinet Office directives around ICT contracts.
“It also derives the majority of its revenue from local government as opposed to Whitehall.”
But it warned that Capita faced challenges from a decline in the number of multi service business processing outsourcing contracts and the potential for contracts returning in house, citing
Birmingham City Council’s announcement that it intends to bring its contact centre back in house.
On HP’s decline, it said: “The higher you climb, the further you fall.” The report blamed the dominance of the company’s central government business for its revenue decline.
It said: “ Legacy contracts are no longer shrinking. But meeting expectations is not deemed good enough.
“HP needs to do more to prove it can offer low cost innovation. That is a tough call.”
It added that HP’s £26m win to provide services at Norfolk County Council proved HP can compete for and win mid-sized deals.
Capita’s growth far exceeds the average growth of the Top 20 UK public sector suppliers, with 12 out of the top 20 reporting declines in their revenues.
The report said: “Our analysis leads us to conclude that it is those players just outside the Top 20 that are significantly outperforming the market – mid-tier alternatives, like Computacenter for infrastructure services or UNIT4 for ERP solutions; Indian outsourcers, like TCS and HCL, determined to replicate their UK private sector success; and management consultancies, like Deloitte and PA Consulting, experiencing a revival of their public sector fortunes.”
Accoring to TechMarketView, the potential of government data remains largely untapped.
It said: “Government has huge amounts of data that, if made more accessible, could be used by application developers to design and develop new digital applications.
“How easily that can be achieved within the Government context, requiring fundamental change in behaviour of multiple public sector organisations as well of citizens, is questionable.”