Capita founder and entrepreneur Rod Aldridge has set up his own Foundation to offer disadvantaged young people a second chance in life and is asking the awkward questions on shared services, public sector reform and social exclusion.

Aldridge told GS-insight there is room for a competitor to Capita, and added that the government’s need for cash offers vendors an opportunity to persuade the government that the time is right for change.

“We estimated at Capita that the support services market is worth £100bn a year. And only 12% of it is being outsourced. This is a massive opportunity but only two companies, Capita and Serco, have really made it.

“It’s a big ask to get someone to outsource something or to sell it. But the government’s strapped for cash, so they need it.

“I’m a Non-Exec on Foreign and Commonwealth Office Services, which deals with the security of embassies. They’ve moved from being in-house to become a Government agency. But really it should engage with a private sector partner to enable it to grow to reach its full potential. But there’d be a lot of political pressure against that, and you’d need a very strong minister to say, “I’m going to do it.”

Aldridge, who retired from Capita in July 2006, is now focused through his Foundation in helping young offenders.

“I’m not an airy-fairy, policy-driven charity where I want to put papers out. What I‘ve done is go for the controversial end. It’s a bit scary taking this on, but I think the skill of entrepreneurship gives you confidence that you can make a difference.”

What do you do after creating and running a £4bn company for over 20 years that has transformed the landscape for shared services and outsourcing in local and central government? If you’re Rod Aldridge, that’s an easy question to answer. After overcoming the barriers of a reticent government attitude to outsourcing, and his own initial lack of confidence in setting up what eventually become business process outsourcing specialist Capita, Aldridge, who retired from Capita in July 2006, has set himself a new goal: offering a real opportunity to young offenders that re-offend within two years of being released from prison.

The Capita experience

Aldridge created and drove the successful development of a company that now employs 27,000 people, and interacts with 33m people in the UK.

“To be honest, I never really considered myself to be an entrepreneur,” says Aldridge. “Before I first started CIPFA (Chartered Institute of Public Finance and Accountancy) Computer Services, which eventually became Capita, I was 38, in something of a hole because I’d applied for 12 jobs and I’d got nowhere. I was working at CIPFA and was quite frustrated, and then the opportunity to start CIPFA Computer Services came along really almost by luck.

“I can honestly say that in those 20 odd years with Capita, I never once didn’t want to go to work. I guess, being an entrepreneur who’s building something, it’s really down to you. If you don’t do it, it’s your own fault. I think it’s that mindset I’m pursuing through my Foundation, focusing on underachievers, people who are not getting the best out of themselves, and who probably don’t have options in what to do with their career.

“Having said that, when I had the chance to do a management buy-out of CIPFA Computer Services, I almost rejected the idea, because at the time, I didn’t actually know what a buyout was or what would be involved. When I look back now, I had no business experience, and we had to change the name of the company to Capita because CIPFA wouldn’t let us use the original name. We had four customers and 20 staff, so although we’d got a start, we were in consultancy, which frankly means you live and die by what you win.”

Encouraging entrepreneurship

Aldridge’s success at Capita was driven by his own determination to silence the doubters within CIPFA. With that behind him, he is now adamant that he can apply his experiences of entrepreneurship to give others a chance in life.

“What I find in a lot of the people I meet, particularly in the extreme cases of people who have gone off the rails, is that they’ve got the brain of an entrepreneur. It’s just gone in the wrong direction. It says, “If I can’t eat, I’ll find how I can. If I want drugs, I’ll go and find how I can get them.” And unfortunately, they’re very good at it. So what the Foundation tries to do is use entrepreneurship as a way of helping them better themselves.

“Coming from a public sector background, having worked for both East and West Sussex County Councils before I joined CIPFA in 1974, I had the good fortune of starting a business almost in a protected environment. That was because the company was owned by CIPFA, so although we were a company bidding for work, we had the massive protection of the Institute around us. Then once we were outside that protection, I had a determination. They riled me. And then they tried to rubbish me, and you don’t do that to me. And that fierce determination was in me from that day and it continued for 22 years. I wasn’t going to fail.”

Aldridge’s leadership also ensured that Capita retained a focused mindset on success.
“The engine driver of intensity was in it from Day One, and I think we timed our move into a market perfectly. That’s a bit of luck but it’s also understanding your market. We kept the energy sustained for 20 years with 36 consecutive half yearly reports of growth. We never talked about flotation because those who say they’re going to float in two years never get there. And we never talked about moving up through the markets, the 250, or FTSE 100, because people would think that was all that matters to you. It was a brilliant day when we were elected into the FTSE.”

Driving the market

Now, looking at the wider services market, Aldridge understands that to be successful, you have to be both big, and able to recognise and create a market.

“Capita actually developed and drove the market, not followed it, like so many others. We said to our clients, ‘If you’re paying us to advise you, why don’t we take on the responsibility of making what we advise happen? And why don’t you give us the people?’ In the end, we were selected more on our capability to change something than we were our price, which is the ultimate business model, where the customer isn’t looking at you from price but more what you can deliver out of quality.”
Aldridge would also like to see more competition emerge.

“This market relies upon people persuading other people to outsource. If Permanent Secretaries in government departments had three or four outsourcing companies all coming at them, it would be irresistible. But if they only have a Capita as a solid option, they won’t do it, because the government would be scared to risk it.

“Some of the private equity guys get into this market in the belief that they can create a Capita. But it will require a number of moves for a company to put itself in a position to do that. A better way, in my opinion, is to say, ‘That’s where Capita is. We’re now going to move to the next phase’.” And Aldridge deems there to be key untapped areas such as legal services.

He also believes that the relationship needs to be reviewed.

“Outsourcing’s not a great word. It gives the impression that you’re giving part of your business away. You’ve almost got to construct a joint venture where organisations have a stake in it. Then you have a shared objective.”

Making Government listen

Aldridge is now involved in the creation of two City academies in the 12-19 age group in the two massively deprived areas of Blackburn and Brighton. Most of the kids have no home life, and only 29% of them are getting A-C grades, if you include Maths and English.

“We’re getting together 30 or so young offenders in April to talk about the justice system they’ve been through, where currently, 74% re-offend within two years of being let out of prison. These kids have committed crimes but they’re still entitled to a chance.”

However, he recognises that progress won’t be easy.

“I saw the Prime Minister, and as a result of our conversation, he had a breakfast at No 10 of the ‘great and good’ in this area. And I had to say I felt disappointed because everyone simply seemed to feel good about being there. I said to them, ‘I don’t know why you feel good? If you were running a business, you’d be out of business, because you’re letting your customers down. 74% of them go back to prison.’

“They didn’t like it, but I don’t care any more. It’s my job now to say these things. I’ve been successful in what I’ve done, and though people may disagree, they can’t ignore facts. So we will give them facts about what it’s like to be a young offender, and we will publish it, even if it makes a lot of people feel uncomfortable.”
For more information visit www.aldridgefoundation.com

Rod Aldridge has called for services companies to be more innovative and persuasive in opening up the market for shared services and outsourcing.

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