Adolfo Hernandez has hung up his skipper’s cap. The avid sailor is at his happiest when cruising through the pale blue waters of the Mediterranean, “reading the winds” so that he can navigate storms and chart a scenic route. But since taking the helm of outsourcing giant Capita in January, he has had little time for hobbies.
“It pains me to admit that this is probably the longest I have been without getting on a boat,” says Hernandez in a meeting room in the company’s plush City headquarters, a stone’s throw from St Paul’s Cathedral. “There has not been a quiet day since I started.”
He looks unlikely to get a rest any time soon, as he plots a wide-reaching turnaround for the embattled IT outsourcer whose jumbled portfolio of contracts includes collecting the BBC licence fee, administering the pensions of 4.5 million people and paying benefits for local councils.
Last week, Capita, which employs 43,000 people, announced a 9 per cent fall in its revenues for the first four months of this year, prompting a slump in its share price, which had already halved over the past year. In March, barely two months into the job, Hernandez announced that pre-tax losses for 2023 were larger than expected, about £107 million, in part because of a major cyberattack.
Next month, he will get a chance to flesh out his plan to turn round Capita at its capital markets day, where he will announce the details of a big cost-cutting drive and an overhaul of the company’s sprawling corporate structure.
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Hernandez, a German-Spanish techie with an avuncular smile, arrived from Amazon Web Services with no experience in the outsourcing sector. At AWS, he had been advising its telecoms clients on using the cloud.
But despite being an unknown in his new industry, he is unfazed by the prospect of reviving Capita. “I’ve always liked a challenge,” he says.
Capita’s empire has been in decline for a while. While it used to jostle with Serco for the title of Britain’s largest outsourcer, a string of ill-fated acquisitions made it a complex, costly beast prone to profit warnings. It was booted out of the FTSE 100 in 2017 and, incredibly, the FTSE 250 last September. A series of contract blunders in the 2000s even earned it the sobriquet “Crapita” in the satirical magazine Private Eye.
Hernandez, 54, understands that it is his job to return the firm to the top leagues. “Capita is a company that creates so much value in society, for the government and for private companies,” he says. “But it is failing to transform that value into economic value. That is the overriding challenge.”
He cut his teeth in Britain’s tech scene and talks like it: our interview is peppered liberally with jargon — words such as “hyperscalers” and acronyms like API (application programming interface) make frequent appearances.
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After 30 years living in London, Hernandez’s English, for all the jargon, is word perfect, but still carries a hard-to-place European accent that betrays a childhood of moving around the Continent, following his Spanish-German diplomat father. When we meet, on a sweltering summer day, he is sporting a grey checked blazer, white shirt and black chinos that match his gelled hair.
Up his sleeve is a plan to find £160 million worth of savings, partly from job cuts, in addition to 900 announced in November. It will also try to move some of its roles to lower-cost centres such as India and South Africa. “We spend £2.6 billion to make £2.6 billion,” Hernandez says.
He also hopes to streamline the business by “doubling down” on “four to five” areas where the company sees growth, while withdrawing from less-profitable work. “I think it’s very important that we start by getting smaller and fitter so that we can then get better and bigger — and it has to be in that order,” he says. Hernandez gives no hints on where Capita will concentrate its efforts, but the company is expected to focus on government outsourcing, providing customer services for business, pensions services and its work on defence, which includes training Navy recruits.
Critics say it has all been tried before and that Capita is stuck in a perma-restructuring. His predecessor, Jon Lewis, also waged a war on the company’s complexity by selling off most of its cash-burning divisions. But Hernandez is clear that those battles of old were mainly waged to fix the company’s balance sheet, and that what he wants to do is more fundamental.
“If you look back at the work that had to take place [over] the past ten years, a lot of it was restructuring more than digital transformation,” he says. Hernandez insists that rather than just making cuts, he will try to deploy new software so that Capita’s various divisions are more joined-up, which would boost productivity. “We need to be a more efficient company,” he says.
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This time last year, Capita had even bigger IT problems on its hands, as it scrambled to deal with the fallout from a hack by Russian cybercriminals. Despite Lewis assuring The Sunday Times that customer information had not been breached and that Capita’s response would go down as a “case history for how to deal with” cybercrime, it emerged the hackers had posted the personal data of the company’s customers on the dark web.
Hernandez will not be drawn on his predecessor’s handling of the crisis. “That would be super unfair,” he says. “Hindsight is a wonderful thing … but it’s a highly pressurised environment [and it] is a little bit crazy when these sorts of things are happening.”
Born in Bonn, a German Rhineland university city famed as the birthplace of Beethoven, Hernandez was raised by “loving” parents who set “very high standards” for him. At one parents’ evening, his father urged his tutors to fail Hernandez on any examination if he did not get full marks.
His passion for mastering the intricacies of technology was sparked at the age of 13, when his father and uncle clubbed together to buy him a Sinclair ZX81 home computer. In one early project, he stayed up for 36 hours to program an electronic scoreboard that flashed up with the end results of games played by the 1984 US men’s Olympic basketball team, led by Michael Jordan. Unlike some techies who confine themselves to the darkness, tapping away at monitors, Hernandez is as happy competing in triathlons or learning the piano as he is programming. “Life is too short not to be curious,” he says.
The family moved to Spain when his father was relocated to the Spanish civil service and they eventually settled in Granada, where Hernandez completed a computer science degree in 1992. He returned to Germany after his studies to start work as a programmer for the IT giant IBM, but soon realised he had people skills that were being neglected and decided to jump ship, taking up sales and marketing roles for the company. He also met his wife, Sarah, who was part of IBM’s UK marketing team and convinced him to make the move to Britain. “I knew she wasn’t going to move to Munich, so I packed up everything that I could fit in my car, sold the rest, and I just drove here.”
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He took up a string of leadership roles in software companies such as Sun Microsystems, now owned by Oracle, and then in 2008 he was hired by Ben Verwaayen, a former chief executive of BT who at this point managed the European operations of French telecoms giant Alcatel-Lucent. “He is basically the repair guy,” said Verwaayen. “Give him a problem, the hairier the better, and he will sort it out because he has two elements to him; he is methodical on one hand, and he is a people person on the other.”
In 2021, Hernandez moved to Amazon Web Services to oversee the division that assists telecoms clients in taking their operations onto the cloud. So why would an executive at one of the world’s most famous companies trade it all in for a tricky turnaround at an embattled outsourcer? “Anybody who has been in this country for a long period knows Capita … It provides the out-of-hours service at my council, it deals with my transport, collects the council tax,” he replies. “So if you are going to do something as a chief executive, there are few companies as meaningful.”
He wasted no time getting started, leaving his job at AWS on January 16 and starting at Capita the following day. After a series of introductory calls with his top executives, Hernandez got to work undertaking a health check of every part of the business. It is a task that has taken him from call centres in Ireland to the corridors of Westminster to the port of Portsmouth, where Capita trains naval recruits. “My dad used to say ‘there is nothing like handling the screw of the machine that makes the car’,” he says. “Going out to look under the bonnet has proven very helpful to get to know our people … what we do well and what they wish we did better,” he adds.
What Hernandez found was a business that had become fundamentally inefficient.
He complains that it is too vertically integrated, giving the example of Capita’s hundreds, or possibly thousands, of software developers, each building different bespoke applications for clients — a service that could instead be licensed out to the likes of Microsoft and deployed across the company. “I think the world of the outsourcer that has to do everything — trying to be good at everything, every time, everywhere — is not realistic.”
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For the moment, though, he is concentrating on the near horizon. This time next year, Hernandez wants the business to be leaner — but happier. “I would also like to see a better company for our colleagues, who have been patient over the last five, ten years of the restructuring, so that they are seeing there is a path going forward.”
But before then, he is hoping he will get a chance to sail in June. Perhaps just after the capital markets day? “Don’t give me any ideas,” he laughs.
The life of Adolfo Hernandez
Born: Bonn, Germany, in March 1970
Status: married with two daughters
School: Hans Christian Andersen (Bonn), Claret (Seville), Sierra Elvira (Granada)
University: Granada, IE Madrid and London Business School
First job: working behind the bar in pubs/bars as a student
Pay: £700,000
Home: Ealing, west London
Car: Audi Q5
Favourite book: The Lord of the Rings, by JRR Tolkien
Film: The Shawshank Redemption
Music: U2, Coldplay, Simple Minds, Queen, Rolling Stones, Maroon 5
Gadget: Apple Watch. “It is a great gadget that has helped me track my health and wellbeing”
Charity: St Martins School (Kibagare slum, Kenya)
Last holiday: sailing around Corsica and Sardinia
Working week
Adolfo Hernandez is a super time planner — “I am obsessed with having organised weeks that are well planned out. I divide my weeks into processing days (writing, emailing, sitting down and working through things) and face-to-face days. I’m a fair-weather cycler commuter into the office.”
The chief executive of Capita wakes at 6am and tries to do a bit of sport before the day starts — yoga or a quick run, or a stop at the gym on the way to work. When in the office, in central London, he uses all the time for meetings and being with colleagues, but also “I spend a lot of time with our customers. I want to hear from them directly on the challenges they are facing, and how Capita can help them deliver better outcomes.”
Evenings tend to run late, with business dinners a few times a week.
Downtime
As much time as possible is spent outdoors — doing yoga, playing golf, sailing and walking his Portuguese water dog — and being with family and friends. Hernandez is also teaching himself piano, says he is an avid supporter of Real Madrid and Arsenal, and likes to challenge himself with “new things”: he has sailed across the Atlantic and completed a couple of Ironman triathlon races.
