From small acorns ...

(By Anthony Miller) Capita has won preferred supplier status for a £200m, seven year IT and BPO services deal at Sheffield City Council. There is an option to extend the arrangement by up to another six years if all goes well. Capita sowed the seeds at Sheffield just three years ago, with a £650K contract for its Academy revenues & benefits software suite (yes, please don’t forget Capita is also a software player!). Now they get to run the business process too, and a whole lot more. Just incredible, but oh so typical of the relentlessly successful Capita machine. Nonetheless, the UK local government landscape has recently changed, with Northgate’s acquisition of Anite’s public sector business (see, Anite Public Sector – Going, Going … Gone!). Judging from our recent meeting with Northgate CEO, Chris Stone, Capita is going to find them an even more formidable competitor. But with Ovum forecasting 12% local government growth this year and 8% next, there should be good opportunities for both players.

Post script: My good friend Douglas Hayward at IDC pointed out that Capita has displaced Liberata at Sheffield. This will be yet another blow for the troubled BPO player. We've written heaps on Liberata in previous weeks and months - the future really does not appear bright.