The names of government outsourcers Serco (SRP) and G4S (GFS) have become synonymous with corporate bumbling and share prices have suffered. But has all the negative publicity really created a buying opportunity, or is the scale of the decline justified?
A 'humiliating shambles'
There has long been entrenched opposition to private companies taking on what are traditionally roles fulfilled by government, but recently the criticism has cranked up to fever pitch amid a series of high-profile fiascos. G4S's failure to provide enough security for the London 2012 Olympics was described by its then chief executive Nick Buckles as a "humiliating shambles". The next blow came when the group was exposed as having charged the government for the continued electronic tagging of people who had never been tagged in the first place, or had the tag removed. Some had even died. Fellow government outsourcing giant Serco also stands accused, and the Cabinet Office has launched an investigation into other key contracts held by the two companies. It will report back soon. At that point there should be clarity on whether the companies will be allowed to bid for future government work. The tagging contract is also the subject of a Serious Fraud Office investigation.