By Christine Murray
LONDON Nov 27 British outsourcing firm Capita
said on Tuesday it was set to win its biggest contract
ever after it became the preferred bidder to run education
services with Staffordshire county council for the next 20
The joint venture with the council is expected to generate
revenues of around 85 million pounds ($136 million)a year, with
Capita holding a majority stake, subject to the approval of the
local elected cabinet.
The news, which comes just a week after it was announced the
preferred bidder for a 320 million pound tie-up to run back
office functions for Barnet council, sent its shares up 3.2
percent by 1530 GMT.
In a trading update earlier in November, Capita Chief
Executive Paul Pindar said that he anticipated a pick up in UK
public sector outsourcing as the government tried to slash costs
to reduce the national deficit.
Local government has been hit particularly hard in Britain's
austerity drive, with all councils facing cuts of around 27
"They are withering on the vine," Staffordshire council
Cabinet Member for Education Ian Parry told Reuters.
"But we're not saying goodbye services, we're saying hello
to new investment," he added.
Schools in Britain receive the majority of their funding
from central government and then buy services from their local
council, and Parry said that many have already been cutting back
Capita will acquire a majority stake in the joint venture
with an initial investment of 24.9 million pounds in the first
year and a further 6.6 million over the following 3 years.
It hopes to generate revenues of at least 2 billion pounds
in the first 10 years of the contract by offering its services
beyond Staffordshire to schools across Britain.
Capita beat off fellow outsourcer Carillion to win
the deal, its fourth local council contract in as many months.