The City upgraded its profit forecasts for Capita today after the outsourcing group said it was aiming to make greater cost savings.

However, the plans will not have pleased its workforce, with 900 jobs said to be at risk.

Capita, best known for collecting the BBC licence fee and the London congestion charge, set out plans over the summer to cut £40 million from its annual cost base by the end of next year. Jon Lewis, its chief executive, now thinks costs can be trimmed by £60 million a year before the spring. The savings are needed if Capita is to hit its target of doubling its operating profit margin from 2.9 per cent last year to 6 per cent in future.

Analysts were surprised