Posted on Thursday 13 June 2013 by Editor

Capita

There is always a risk when a locally based company is acquired by a larger corporation that the identity of that organisation and the strengths that led to its success can be watered down and lost.

Not so with Capita plc's acquisition of Northgate Managed Services.

Northgate was well known both in Northern Ireland and Great Britain for providing cloud based and infrastructure services to public, private and third sector organisations, as well as specialist managed IT services in the education, government, utilities and charities sectors.

Capita agreed to acquire the business from its GB-based parent Northgate Information Solutions for an enterprise value of £65m in February this year.

While the transaction only closed in March it is clear when I visit the company's office in Newtownabbey in late May that the transition to becoming Capita Managed IT Solutions has been a smooth one.

John Chambers, director of Capita Managed IT Solutions, says that is largely because Capita had no intention of making radical changes when it bought the company.

"We're not fundamentally changing how the operation works because it does work and we're very pleased with how it performs. We have plans and ideas around how we can compete better, but we're in a good place," he told Ulster Business.

"Service excellence is core and the first thing we had to do was reassure clients that things are not changing. Our high standards will be maintained."

Mr Chambers, who has 25 years of experience in the IT industry, the last three with Capita, explains that Capita was interested in Northgate for a number of reasons – the strength of its client base, its service delivery track record and its technical capability, not to mention the local delivery capability that the Newtownabbey delivery centre offers to the company.

Northgate's strengths were viewed as complementary to other divisions of Capita plc, a stock market listed provider of BPO and integrated professional support service solutions with over 50,000 staff at more than 350 sites, including 70 business centres across the UK, Europe, India and South Africa.

Already, Capita is working out how best to utilise the expertise in Northern Ireland, while teams from the wider Capita group are collaborating with the leaders of the former Northgate business to identify opportunities to offer additional services to existing clients.

"There are projects that maybe Northgate wouldn't have gone for previously because they were outside of its core areas of expertise which, following the acquisition, they are going for. That's an immediate benefit. There are areas which the rest of Capita is strong in which are already complementing what we do here," said Chambers.

"Capita as a wider organisation is growing rapidly. There is demand in the marketplace. The confidence the acquisition gives to the team here in terms of certainty means that we're now developing the pipeline of work quite aggressively."

While he lives in England, Chambers is originally from Newtownards and will be spending at least three days a week in Northern Ireland in his new role, while also overseeing the business's offices in Scotland and England.

"We have a very strong team here, which is why there hasn't been a truck load of people from Capita who have showed up to take over. It is more about getting the connections going to see what we can achieve," he said.

"My role is to drive that collaboration and look at how we can accelerate the growth of the business. Having that knowledge of Capita and the team here and in GB is the primary objective at this stage."

POSITIVE REACTION

Ed Brown, Service Delivery Director at Capita Managed IT Solutions and a long term Northgate employee, says that both his colleagues and customers have welcomed the alliance with Capita.

"We spent a lot of time talking to our customers and the response has been overwhelmingly positive towards the acquisition. Many of them see the added value that Capita brings to the table as being very good for them as well," he said.

"It has been incredibly refreshing to see that collaboration is not just something that's talked about, it is something which is executed on. Not only have we seen the benefits of the complementary skills sets and been able to bring that to existing customers, but it is a two way street. Capita have brought us to the table with their customer base to work on projects already. We hope it is going to be really beneficial for us both," he adds.

It's a sentiment that Marketing Director Eleanor Lee agrees with, noting the communication with both staff and clients has been a priority.

"We spent that first eight weeks communicating with staff and customers around what Capita is all about and giving them a chance to ask questions here and in all the other offices. The response has been good. A lot of people are still doing the same things and working with the same clients. But the leaders in the business are very comfortable with where we go next as part of Capita," she said.

GROWTH AREAS

Northgate Managed Services made a pro-forma operating profit for its financial year to April 2012 of £10m on turnover of £141.6m.

Geographically, business is split almost 50/50 between Northern Ireland and Great Britain and Capita's directors aim to maintain that balance to keep the business competitive.

The business is also set to remain focused on its core areas, namely the public sector (it has renewed a number of large public sector contracts since the acquisition); utilities; education; and increasingly the mid-market commercial sector.

"I think it is very much a case of more of the same – hopefully much more of the same. We have real capabilities and skills in our organisation which Capita recognised and they plan to really leverage those skills in areas we're good at," says Ed Brown.

"A lot of contracts will come up for renewal and I think being part of the larger Capita organisation puts us in a position of strength to renew those contracts and also make more services available to those customers. We can bring many different services into play as part of Capita that we never had ourselves as Northgate."

He notes that with every organisation striving to be more efficient, reduce costs and at the same time deliver better service to their own customers, there are plenty of opportunities to provide additional services to both new and existing customers.

"Increasingly customers are really evaluating when they go to tender whether a company is going to have the financial strength to deliver for the lifespan of a contract," he adds.

CHALLENGES

That organisations are striving for ever greater efficiencies also means Capita's market is a competitive one.

"For everyone in this industry the market is quite tough at the moment. Customers are demanding an awful lot more for what they spend, which has not increased," says Brown.

"That drives us to be more efficient in what we do and we have to add a lot more value to demonstrate what we bring to them. For the next little while the market is going to remain tough so value for money is going to be incredibly important."

Brown says that while there are organisations which compete purely on cost, most of the firm's customers put an emphasis on quality of service, so going to the lowest cost provider isn't an option for them. Far from just having the components in place, the best managed services providers are the ones who can extract the most value from the technology, he notes.

Capita is also at the forefront of helping its clients deal with changes in the way organisations and their people use technology – for example the increasing trend towards mobile computing and Bring Your Own Device.

Ed Brown explains: "What you end up with is multiple interfaces with the system – users may have a laptop and desktop computer, ipad, some form of android device, and they are using all of them to interface with their core enterprise system. That's a huge challenge for internal IT departments and one of the areas we can help them with."

THE FUTURE

Capita Managed IT Solutions has approximately 1,000 employees, more than half of which are in Northern Ireland. It has a low staff attrition rate and, having invested significantly in apprenticeships, remains a key player in developing the pool of IT talent in the province.

Chambers says it is Capita's intention to grow the business further in Northern Ireland and, while it is early days, the initial signs bode well.

"Part of why we acquired the organisation is the centre that's here and the ability to leverage it into other opportunities," says Chambers.

"We have ambitions of growing the business but we will go about that in a way that is sustainable. Having that core team that has worked for the organisation for a long time gives us real strength and technical skills that will allow us to onboard additional resource and have those people be productive very quickly."

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