Vertex sells up to rival Serco
The list of potential outsourcing companies the public sector can turn to has shrunk with Serco's takeover of what was left of its rival Vertex in the UK.
Serco has paid £55m in cash for Vertex Public Sector. Last year the equally acquisitive Capita paid more than £40m for Vertex Private Sector.
The acquisition considerably increases Serco's market presence. The company has major contracts with Glasgow, Hertfordshire and Peterborough councils.
Vertex Public Sector customers in local government include Westminster and Thurrock councils, and in central government the Child Maintenance and Enforcement Commission (CMEC) and Job Centre Plus. Its 3,000 employees handle approximately 4.5 million citizen interactions a year.
Serco chief executive Christopher Hyman said: "This acquisition enhances the range of services we offer to the UK public sector as they seek to reduce costs whilst continuously improving outcomes for citizens.
"We are pleased with the important customer relationships it brings and the opportunity to extend and expand these. The newly added skills and capabilities will also help Serco address future prospects in both the local authority and central government markets.
Serco will now have annual revenues of over $1bn (£629m) putting it firmly into the top five of public sector suppliers.
Peter Ryan, lead IT services analyst at Ovum said no one should be surprised by the takeover. "Vertex's public sector division has been successful in winning government related contracts for some time, and has a proven track record in the delivery of such deals. In addition, there is no hotter area of outsourcing in the UK than the public sector at the moment.
"Governments at all levels are facing down the barrel of austerity, and as such are looking at third-party delivery as a means of reducing costs related to business functions. The fact that Vertex has a legacy in this domain expertise (in addition to a healthy income and profit performance) makes its purchase by Serco logical and straightforward."