Capita Using Cost Savings To Invest In AI Push

Outsourcing giant Capita has revealed plans to reinvest some cost-cutting efforts into artificial intelligence (AI) as it looks to “future proof” the business.

The group said it had so far stripped out £185 million of costs as part of its plans to save £250 million a year by the end of 2025 and will put some of the savings into new technology as it rolls out new AI offerings to clients.

Capita has launched several new AI products, including Salesforce’s Agentforce for large-scale recruitment, while it has found more than 200 use cases for AI across the business, and launched five new products with five more in the detailed testing stage.

The group is putting faith in the new technology to help drive savings within the business as well as offering customers new services.

Adolfo Hernandez, chief executive of Capita, said customer interest in so-called AI agent technology had “grown exponentially”.

“We are reinvesting a portion of our efficiency savings into new technology solutions, particularly those underpinned by AI and we are focused on bringing these technology solutions to more clients,” he said.

It comes as the group is looking to improve its profitability, while sales have also come under pressure, down 4.5% in the five months to May 31.

Capita said: “We are making good operational progress to future-proof the business in line with our expectations.”

The group added: “Our first priority is to improve the group’s operating margin, while maintaining cost consciousness.

“We are building a leaner organisation, reinvesting in the technology core of the business and deepening our own AI skills, developing products and forging new partnerships.”

Its latest trading update showed sales in its contact centre outsourcing business slumped 21% in the first five months, hit by contract losses and lower demand in the telecoms sector.

This was partially offset by 2.3% growth in sales across its public service arm and a 6.4% rise for its regulated services division.

Capita hiked its cost reduction target in December last year to £250 million by the end of 2025, up from £160 million, revealing it was aiming to drive savings from the use of AI and staff turnover.

Capita – a major contractor for the Government and local authorities which also manages the licence fee for the BBC and runs recruitment for the British Army – has been accelerating the use of AI and generative AI to speed up certain tasks, such as recruitment.

Last year, it announced plans to cut around 900 jobs as part of the cost-reducing plan, but is also looking to deliver some of the extra savings through staff turnover, which was at a rate of 21.7% at the end of last year.