outsourcing stock

Capita has won back the Transport for London (TfL) congestion charging, low emission zone and traffic enforcement contract from IBM, which is worth an estimated £145 million over five years.

Although Capita designed and implemented the technology and operated the congestion charging schemes when TfL first launched it in February 2003, IBM took over the deal in 2009. TfL said at the time that IBM was the "economically advantageous" choice over the British outsourcer.

However, after four years of management TfL has now decided to hand the contract back to Capita. It will take full responsibility for the schemes in November 2015 following a period of implementation which commences in 2014.

TfL has the option to extend the contract for a further five years.

Capita will provide the back office and contact centre to run the schemes and the associated enforcement processes.

"The experience and expertise we have across the Group, including our knowledge of managing complex IT systems and seamless multi-channel customer services, together with implementing and managing the congestion charging scheme when it was first launched, means that we are well equipped to deliver these schemes," said Andy Parker, Capita plc deputy chief executive.

"Congestion Charging, Low Emission Zones and traffic enforcement play an important role in reducing congestion, meeting emissions targets and increasing investment in London's transport and we are looking forward to working alongside TfL once again to improve the experience for road users."

Congestion Charging was introduced to reduce traffic congestion in the capital and the income raised is wholly reinvested in transport for London. Traffic enforcement notice processing includes processing Penalty Charge Notices for bus lane and yellow box junction contraventions.

Although a good win for Capita, director at TechMarketView Tola Sargeant notes that it isn't likely to be as lucrative this time round. 

"This will be a particularly sweet contract win for Capita, which designed and ran the congestion charging scheme when TfL first launched it in February 2003 until 2009, when IBM took over (see Capita loses London Congestion Charging to IBM)," said Sargeant.

"It's unlikely, however, be as lucrative a contract for Capita as it was ten years ago. Although the nature of the deal has evolved, it's interesting to note that Capita's first contract with TfL was worth around £60 million per annum to the company, contributing about 3% (£10 million) of profits in 2009."

She added: "Today's deal works out at about half that in revenue terms thanks in part to automation and the continued pressure to drive down costs."