Published in News

Outsourcing giant Capita is having a rough time

by on08 March 2024


Massive losses after cyberattack

Outsourcing giant Capita has revealed shocking annual losses of more than €126.5 million, with a big chunk blamed on a cyberattack it suffered last March.

The attack, carried out by the notorious Black Basta group, caused chaos to the company's financial health, costing €30 million.

Capita first said the incident's impact was €23.7 million, but its new figures show the attack's colossal damage.

The company's annual report for 2023 showed that the rest of the losses came from various factors, including significant costs related to business exits and goodwill impairment.

The aftermath of the cyber incident has been destructive. Capita's share price has dropped by more than 54 per cent since the attack, significantly impacting investor confidence.

Capita saw a big drop in its market value, falling by 20 per cent, which also made shareholders unhappy.

The cyberattack has also hurt Capita's customer relations, as shown by a drop in its net promoter score from +25 to +16.

Capita's pensions administration business was especially hit, raising worries about data security in sensitive sectors.

Capita's new boss, Adolfo Hernandez, has announced harsh cost-cutting measures to save the company's financial health in response to the economic mess.

"Our 2023 financial results have shown some progress. But we have not yet delivered the operational excellence that will let us create the right platform for future growth or achieve our full potential for the benefit of shareholders," Hernandez said.

"Looking forward, we will focus on precision in execution, co-creating solutions with clients, speeding up the use of technology, and using our technology partnerships to drive improvement in our operating and financial performance."

Hernandez set out plans to cut an extra €118.4 million in costs by mid-2025, stressing the need for operational efficiency and technological innovation to boost Capita's competitive edge and help future growth. But the details of these cost-saving plans are still secret, sparking rumours about possible job cuts and restructuring efforts.

The company's recent history shows its active approach to cost reduction, shown by the axing of around 900 jobs and the merging of property leases in the previous year.

Amid the financial troubles, questions come up about how much data was stolen and the possible consequences for stakeholders.

Although Capita first told stakeholders that no data was stolen, later investigations showed that data was taken from some servers. The need for more details about how much data was taken and who was affected raises concerns about honesty and responsibility.

Capita's data breaches have also attracted regulatory attention, with the Information Commissioner's Office, a data protection watchdog, receiving many reports from affected organisations.

In May last year, another breach exposed files with details on local council benefit payments.

With possible fines hanging over it under British data protection laws, Capita faces enormous pressure to fix security problems and keep its data protection promises.

Last modified on 08 March 2024
Rate this item
(0 votes)