Capita (CPI.L) plans to cut at least 200 jobs and has begun a consultation process with some employees, The Guardian reported.
Job cuts by the company, a major provider of outsourced services to the UK government with 61,000 employees, will be focused on its central support teams in London, the report said.
A Capita spokesman told Yahoo Finance: “As a result of the ongoing COVID-19 crisis, we are taking further, decisive cost-cutting action to preserve cash and protect our financial position. This will regrettably result in the loss of a number of jobs within our head office.”
Those who work for clients are safe for now but further job cuts are possible as the firm struggles to remain within conditions set by its lenders, the report said, adding that the company has taken a “severe financial hit.”
However, a spokesman told Yahoo Finance that the company has “plenty of headroom” and that while it has been hurt financially, that the impact has not been severe.
Capita is working on several projects for the UK government in its COVID response, including helping the NHS vet staff returning to the frontline.
It earned a major chunk of its 2019 revenue by running army recruitment, collecting the BBC licence fee and enforcing London’s congestion zone.
In March, Capita warned investors that the pandemic would have a “net negative” effect on the business.
The UK economy is set to be the hardest hit among the world’s developed countries due to the pandemic, the Organisation for Economic Co-operation and Development (OECD) said last week.
Britain’s economy was likely to slump by 11.5% in 2020 – but could contract by 14% if there is a second wave of COVID-19 later this year, it said.
Meanwhile leading economists have warned ministers that they predict “really high unemployment for the foreseeable future”.
Torsten Bell, chief executive of the Resolution Foundation, told ministers at the government’s Treasury Committee that households should prepare for a “big labour market shock” despite measures to protect jobs.