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Business Comment

James Moore: G4S needs radical surgery to survive

Outlook The reason that G4S made such a pig's ear of the London Olympics is that it failed to hire enough staff to do the job.

Guess what Ashley Almanza is planning to do as part of his turnaround plan: that's right, he's cutting jobs. About 400 of them in Britain.

But, of course, the problem with companies such as G4S is that their customers' interests are secondary to the City's interests. And the City expects to hear a new chief executive talking about job cuts and restructuring when he comes in. It's called earning your spurs.

In reality, it's questionable whether even the City will find all that much to cheer about from what Mr Almanza has said, as the shares' lacklustre performance demonstrates.

The company is planning to restructure or sell 35 under-performing businesses, which might look good but they only account for about 5 per cent of group turnover.

It's hard to argue with his plan to invest the money in faster growing emerging markets, but it does rather look like tinkering around the edges when G4S may in fact need more radical surgery.

The problem with the company is that it runs a huge array of businesses, many in sensitive areas, with operations in 120 countries and more than 600,000 employees.

Mucking up the Olympics is one thing. Mucking up the operation of prisons, or detention centres handling asylum seekers? That's much more serious, and given G4S's size it is very easy to see how serious problems can develop in far flung, or not so far flung regions, without management being aware. How could they be?

There have been calls in some quarters for a break up, but Mr Almanza appears to have put them to bed with his rejection of a £1.55bn offer for the group's cash security business. Meanwhile problems such as the inquiry by the Serious Fraud Office can be blamed on past sins.

However, questions about the operations and the quality of vast outsourcing companies such as G4S and its ilk remain. They may require better answers than a bit of tinkering if G4S is caught in the crosshairs of another big controversy.