Capita bags £100m Harrow council IT deal

Capita has won a £100m deal with the London Borough of Harrow for a major overhaul of the council's IT systems as part of an ambitious business transformation initiative.

The 10-year deal will see Capita work as a partner to the council's in-house IT team and develop major new systems including a contact centre and a back-office overhaul - all part of a 'one stop shop' service delivery for residents of the borough.

Harrow insists it is not an outsourcing deal and said the council's 85 IT staff will not be transferred to the private sector.

The deal was announced on the back of Capita's financial results for the first six months of 2005. The company saw operating profits rise 18 per cent to £81m compared to the same period last year and announced plans to double its staff headcount in India to 300 by the end of 2005.

Despite this Capita lost out on a number of key IT deals at the Department for Work and Pensions and Rochdale council. Other difficulties include the government's decision during the first half of the year to halt the lorry-charging road scheme procurement.

But Phil Codling, analyst at Ovum Holway, dismissed the idea that the dip in top-line growth is a symptom of a more serious decline at Capita and pointed to a healthy £3.4bn pipeline of contracts.

"While [Capita executive chairman] Rod Aldridge may not look back on the first half of 2005 as a golden period in its history, it is still too early to claim that the wheels are falling off the Capita growth machine," he said in a research note.