Councils exit 10-year Capita deal to boost decision and project velocity

South Oxfordshire Council and Vale of White Horse District Council have completed a wholesale migration of digital infrastructure from a decade-long Capita contract to an in-house cloud-native model hosted on Microsoft Azure.

The two councils brought their 10-year outsourcing agreement with Capita to an end and brought IT back in-house in 2025. The transition, carried out with the help of Microsoft partner Node4, saw the neighbouring authorities in the south of England decouple from a multi-council shared environment to build a bespoke, cloud-first infrastructure.

The relationship with Capita – established in 2015 and live by mid-2016 – originally covered five local authorities, including Hart, Mendip and Havant. While the model was initially promoted for its economies of scale, the authorities found the shared-tenant architecture could stifle innovation and slow down projects. Under the arrangement with Capita, any technical change required a “negotiation” phase and consensus across all participating councils, as updates were rolled out universally.

UK councils are increasingly migrating away from single managed service providers or large shared IT infrastructures to avoid supplier lock-in, reduce costs and modernise digital services. This transition usually involves bringing IT management in-house or shifting to cloud-first hosting. 

Recent shifts and transformations by UK local authorities include:

• Derbyshire County Council migrating hundreds of applications from an ageing local datacentre to Microsoft Azure. 
• Vale of Glamorgan Council initiating a transition to a hybrid cloud environment to improve agility and reduce ongoing reliance on external service providers. 
• London Borough of Havering and the London Borough of Newham decoupling from a shared IT managed service to tailor systems to their own priorities. 

Simon Turner, IT and digital services manager at South Oxfordshire Council and Vale of White Horse District Council, said the contract was no longer flexible enough to meet the councils’ requirements. 

“Our IT needs at the start of the contract were very different to what we need today,” said Turner. “A single supplier providing IT services to five or more authorities has to have a minimum bench line. And of course, changes made within that environment would have to be agreed by the five councils to go forward.

“Everyone has their own version of what IT might be, and different councils have different priorities about what they need to achieve. So, different councils wanted to achieve different things.”

The councils used the two years before contract expiry in September 2025 to plan a rebuild of their digital ecosystem. Procurement was handled through the Crown Commercial Service RM6100 Technology Services 3 Lot 2 framework, which allowed the authorities to bypass traditional open tenders and select Node4 based on its Microsoft specialisms. These centred on moving applications and data from virtual machines in Capita’s datacentres to Microsoft Azure.

Another core pillar of the project was a hardware refresh that saw nearly 800 laptops upgraded to Windows 11 and connected to the new network. These devices had to be entirely stripped of existing intellectual property, wiped and reimaged to join a new internal network.

By deploying Microsoft Intune and Autopilot, the team established a “laptop factory” and rolled out 200 refreshed devices per week. This standardised approach limited individual user downtime to approximately two hours per person over the four-week deployment window.

The migration also involved a complex shift of identity management and server infrastructure. The councils moved away from a legacy hybrid Active Directory and System Center Configuration Manager environment to a cloud identity model using Microsoft Entra ID. This shift was accompanied by a wholesale migration of 790 users from a deskbound legacy telephony platform to a cloud-native Microsoft Teams Calling system.

While many of the councils’ core applications were already software-as-a-service-based, 14 legacy servers remained in the provider’s datacentres. These were successfully replicated and migrated into Microsoft Azure during what was described as the most critical part of the exit strategy, as it involved mission-critical data for planning and building control services.

One planning application, which was 30 years old and highly embedded across both authorities, required an offline period of four weeks for rigorous stress-testing and database administration (DBA) work on legacy Oracle data. Node4’s specialist data services team provided skills to ensure the application could function in a modern cloud environment.

The project was completed ahead of the early July target, with all users migrated and the old environment switched off by the end of June. Turner said the transition was seamless, with no missing calls during the telephony cutover – an outcome he described as “quite unusual” for a migration of this scale.

Regaining control of the IT environment has also allowed the councils to build a new internal service culture. When the service was first outsourced in 2015, the entire IT team was transferred out of the councils’ control. Bringing the service back in-house required standing up a new service desk team using the Halo platform and expanding internal cyber security resources.

Several staff members who had worked on the Capita contract were transferred back to the councils under TUPE arrangements. Turner explains that these colleagues are now “putting their feet under the same desk” but working within a service-led model rather than a contract-led environment. This allows the IT department to reflect the specific priorities of the council rather than deliver a service dictated by a third-party agreement.

The councils are now finalising a 30-page ethical artificial intelligence (AI) strategy to govern the future use of Microsoft Copilot and Power BI. This roadmap includes a trial of agentic AI tools within the service desk to drive further efficiencies. Turner notes that while an in-house model may not be cheaper than the previous provider’s economies of scale, the ability to not trail the market justifies the investment.

The move also positions the councils for potential local government reorganisation in Oxfordshire. Having an in-house team and a cloud-native stack allows the authorities to adapt to structural changes without the “slowest member of the pack” limitations inherent in multi-party outsourcing contracts.

The partnership with Node4 has been extended to include managed DBA services, providing the councils with specialist database depth that would be unaffordable as a full-time internal resource. Turner concludes that the ability to deploy technology at pace to meet business needs as they arise is now the councils’ primary strategic advantage.