Serco to sell majority of private sector business and focus on government

Outsourcing group Serco is selling off the majority of its private sector business process outsourcing (BPO) companies to raise funds and focus on supplying for governments, according to a stock exchange announcement by the firm earlier this week.

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By Samera Owusu Tutu

14 Nov 2014

Serco is selling off its main BPO businesses Intelenet and The Listening Company, and also its environmental services division.

Moving forward, Serco intends to focus on supplying services for governments. Serco group chief executive officer Rupert Soames stressed that the future direction of Serco plays to its strengths: “Serco will concentrate on its core as a leading supplier of public services – an international B2G business focused on Justice and Immigration, Defence, Transport, Citizen Services and Healthcare.

“These are businesses which we are really good at, where we deliver outstanding service, and where our skills, experience and international reach can differentiate us. There are a tough couple of years ahead as we make this transition, but it will be worth it.”

This decision comes in the wake of a change to EU procurement laws that allows commissioners to take suppliers’ past performance into account when tendering for new contracts.

A Cabinet Office spokesperson said: "We would expect Serco’s progress in relation to corporate renewal to be taken into account when it expresses an interest in bidding for new and future work with Government, subject to usual procurement rules."

Serco is currently paying the government back millions of pounds for errors in the monitoring of prisoners, and is currently facing a Serious Fraud Office investigation. Serco agreed to repay £70.5m plus VAT to reimburse the government for money owed on MoJ's electronic monitoring and prisoner escort contracts, and for other costs incurred.

A report in the Evening Standard yesterday flagged the growth seen this year by rivals G4S and Capita (4% and 8% respectively). According to the report, G4S — who was also embroiled in the tagging scandal and, like Serco, is under investigation by the Serious Fraud Office — saw growth after expanding into the US and emerging markets.

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