Capita set to close 100 offices in the UK

Shortly after UK professional services firm Capita posted a £28.5 million loss for the first half of 2020, the company has announced it could close one-third of its British offices. The move comes after months of employees working from home amid the Covid-19 lockdown – something which has prompted many other companies to wonder if an office lease is actually a necessary expense in modern business.

It is becoming increasingly clear that a simple ‘return to normal’ after lockdown might be more harmful than helpful to businesses. As many companies look to recover from a massive economic hit during the first half of 2020 – and look for ways to downsize their spending – an Eden McCallum study found that more than 80% of their employees had been working from home up until June, and that around one-fifth of companies were operating with 100% of employees working from home. Of those, 43% said it had positively impacted productivity, compared to just 29% saying the opposite.

Many companies are currently facing the question of whether returning to the inflexible model of office work is practicable, or even desirable, in the post-lockdown environment. Considering the savings which could be made by not renewing leases, while many workers seem to be just as productive, if not more so, working remotely, one firm to re-evaluate its number of locales is Capita.

Having spent recent years enacting a stringent restructuring programme, Capita looked to have turned a corner in late 2019, having returned to growth and announced plans to recruit throughout the coming year. However, new figures released by the firm in August revealed that its finances had been ravaged by the global coronavirus pandemic. Describing the start of 2020 as a “challenging six months” in the firm’s half year results, Capita reported a loss before tax of £28.5 million – a startling contrast with its first half results in 2019, where it enjoyed a £31.2 million profit.

Capita has already been working to offset the losses. The firm announced it would axe at least 200 jobs in June, while moving to hasten its simplification of its portfolio, accelerating strategic its focus on a portfolio of software capabilities aligned to Capita’s core services and vertical markets. This resulted in the sale of Eclipse Legal Systems in June, and also placing its Education Software Solutions wing on the market. As it looks to find other measures to strengthen its balance sheet, Capita has now announced it will not be renewing the leases of a large portion of its offices.

Capita currently operates from 400 sites in the UK and around the world – most of which are in Britain – but as reported by the BBC, it is due to let its leases on almost workplaces lapse in the coming period. Capita has already decided not to renew leases on 25 offices, but that number is likely to rise rapidly in the coming months, as the firm restructures to rein in costs, and enable its staff to work with greater flexibility as the Covid-19 pandemic continues to rage.

A Capita spokesman told the BBC, "Capita's 45,000 employees work in offices spread right across towns and cities in the UK - we are committed to that continuing both now and in the long term. Following dialogue with our employees it has become very clear that they would like to work in a more flexible way, which will involve increased working from home, but they will still spend a significant amount of their time working from offices that are based in the heart of our local communities."

According to the UK’s HR professionals representative body, the Chartered Institute of Personnel and Development (CIPD), before the pandemic, there was a taboo around flexible working – but seeing how employees worked from home during the lockdown has opened the eyes of many employers to its potential. This was also something highlighted by a recent BBC study found 50 major UK employers had no plans to return all staff to the office full time.

This trend is also growing across the Atlantic, with a number of US businesses also looking to foster a post-office culture to improve their profitability. In August for example, Sikich, a national accounting and consulting firm, announced a plan to permanently shift its workplace model to one centered on remote work. The Chicago-based firm will shrink the size of its office space while allowing its more than 1,000 professionals to work from home indefinitely.