Capita reports mixed trading results for the year as it balances contract declines with ambitious AI integration and cost-saving initiatives, aiming for medium-term growth despite near-term challenges.
Capita reported a mixed trading update for the 11 months to 30 November 2025, as the outsourcing group balances contract losses in its Contact Centre business with cost savings and an accelerating push into AI-enabled services.
According to the original report, gro...
Continue Reading This Article
Enjoy this article as well as all of our content, including reports, news, tips and more.
By registering or signing into your SRM Today account, you agree to SRM Today's Terms of Use and consent to the processing of your personal information as described in our Privacy Policy.
up performance was driven by divergent divisional trends. Capita Public Service, which accounts for around 63% of group revenue, grew 4.0% year-to-date, though growth moderated in the second half of 2025 because of client-driven revenue timing. The Contact Centre division, about 23% of revenue, saw an 18.3% decline following previously announced contract losses and volume reductions, particularly in telecommunications. Pension Solutions, contributing roughly 8% of revenue, returned to modest growth with a year-to-date increase of 1.5%. Regulated Services fell 14.3% as the company continued to exit lower-margin activities and hand back agreed contracts while completing its withdrawal from that sector.
Capita said it expects Capita Public Service growth to come in slightly below mid-single digits for the full year, Contact Centre revenue to decline in the high teens, and Pension Solutions to deliver low single-digit growth. The company maintained guidance on margin improvement, free cash flow , noting inclusion of the £14m ICO settlement , and debt metrics consistent with its medium-term targets.
Management stressed that efficiency gains are underpinning controllable performance. The group has delivered its targeted £250m of annualised cost savings, a target it increased earlier in the turnaround, and said these savings were driven in part by AI-enabled productivity measures. Capita launched an AI Catalyst Stack and opened an AI Catalyst Lab under a new AI&PO organisation, embedding agents across Microsoft and Salesforce platforms and logging more than 550 opportunities and use cases. The company said the unweighted contract pipeline rose 41% from the half year to £16.5bn, with about £3.5bn of opportunities featuring a strong technology component.
“We are very pleased to have announced today an agreement for the transition of the remaining two legacy evergreen closed book Life & Pensions contracts to Royal London,” Chief Executive Adolfo Hernandez said, noting the transfers were a key 2025 priority and part of the group’s “manage for value” strategy. The company characterised the deal as a final step in exiting legacy life & pensions closed-book exposure.
Independent reporting adds detail on that transition. Reuters reported the Royal London agreement is valued at £52.5m and that the transfer is expected to run over five years, with an annual free cash outflow of about £20m , equivalent to £100m over the full period , underscoring that the exit carries near-term cash impacts even as it removes legacy risk.
The trading statement and prior company disclosures place the current progress in context. Full-year 2024 results showed an operating loss that narrowed year-on-year as Capita accelerated restructuring and began monetising disposals, while earlier trading updates through June 2025 set out an expanding AI product portfolio and a ramping cost-reduction programme that had delivered material annualised savings ahead of plan. Company materials emphasise average handling time reductions of around 20% in early adopter Contact Centre and local government clients where AI tools have been deployed.
Market and adviser commentary highlights both the upside and the risks. Industry observers note improved customer metrics, with renewal rates and net promoter scores recovering strongly compared with 2023, signalling better commercial traction on more competitive, technology-led bids. At the same time, investor notes flag soft internal morale: employee NPS has deteriorated even as customer satisfaction improved, a dynamic that could complicate delivery in labour-intensive services.
Capita said it will continue to prioritise margin recovery, free cash generation and debt reduction while embedding AI across mission-critical services and exiting lower-margin activities. The group’s larger pipeline and AI investments present pathways to medium-term profitable growth, but the scale of Contact Centre revenue reductions and the cash flow profile of legacy contract exits mean near-term results will remain shaped by both restructuring and strategic reinvestment decisions.
Source: Noah Wire Services
