Outsourcing firm Capita has announced a significant increase in its cost-saving targets as it plans to leverage artificial intelligence (AI) technologies to enhance operational efficiency. On Tuesday, the company communicated its intention to elevate its savings forecast from £160 million to as much as £250 million.

Capita, a major contractor serving the Government and local authorities with a global workforce of approximately 41,000 employees, is anticipating a substantial reduction in staff numbers through voluntary attrition. The firm has indicated that approximately 21% of its current workforce has been attributed to voluntary departures, which it suggests will aid in achieving its enhanced savings without necessitating large-scale redundancies.

A notable component of Capita's strategy involves the integration of AI, including generative AI, particularly within the context of its contact centres and services for local government clients. The firm reported that the implementation of these AI solutions has resulted in a reduction of average handling times by nearly 20%. In addition, Capita highlighted that early indications suggest that its adoption of AI technologies has enabled the company to secure new customer contracts.

Despite this positive development regarding AI, Capita also disclosed that it anticipates an approximate £20 million annual impact from an anticipated increase in employer national insurance rates next year. However, the company expects to mitigate these financial pressures through the savings generated by its new AI initiatives and the voluntary departures of staff.

In relation to its financial performance, Capita noted a decline in revenues, which were approximately 8% lower on a like-for-like basis for the 11 months leading up to the end of November compared to the previous year. This downturn in revenues has been attributed partially to contract losses disclosed in the prior year, alongside delays in initiating two new contracts.

The implications of Capita's shift towards greater AI integration and its strategic approach to workforce management underscore a broader trend in which companies increasingly aim to modernise operations through automation, reflecting an evolving dynamic in business practices across various industries.

Source: Noah Wire Services