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Serco: Coalition will come good for outsourcers
THERE may be trouble ahead for outsourcers. The new coalition government is intent on getting a better deal from support services firms; as one of the biggest clients in town, the likes of Serco are powerless to resist.
But while there is short-term uncertainty, this government will outsource more in the future. The massive Work Programme will be a big earner for firms that achieve results, and plans to rehabilitate criminals in the community instead of prison will also need private sector partners.
Serco is also well diversified: around 40 per cent of revenue comes from the US, Australia and the Middle East. And the US alone accounts for 25 per cent of sales, or some $1bn. Savvy investors will capitalise on any short-term doubts.