ANOTHER week, another giant outsourcing company in trouble. After the collapse on January 15th of Carillion, it was Capita’s turn to give its own profit warning on January 31st. Spooked by the air of panic surrounding the outsourcing industry, investors quickly dumped Capita shares; by the end of the day the firm had lost 48% of its value. It was the steepest slip yet in a long-term slide. The company’s market capitalisation has fallen from £6.9bn ($10.5bn) in 2013 to £1.2bn now.

Despite the sell-off, most analysts believe that Capita’s announcement should forestall, rather than hasten, another Carillion-style calamity. Capita’s new boss, Jonathan Lewis, has announced all the company’s awful news in one go, thus clearing the decks for the restructurings and probable redundancies that he hopes will restore Capita’s fortunes. It is known as “kitchen-sinking” in the business. Carillion probably should have done something similar a while ago, rather than drift to disaster.

If Capita does survive, the government will breathe a sigh of relief. The company, which employs about 50,000 people in Britain, provides a vast range of services to central and local authorities. Since January 2015 it has won contracts from 292 different public-sector buyers, far more than any other supplier (see chart), according to Tussell, a consultancy that scrutinises public procurement.

By value, these contracts are dwarfed by those won by big construction companies, such as Carillion, for building hospitals, motorways and the like. Last year Capita was only the government’s 69th-biggest supplier by value (Carillion was tenth). But Capita’s tentacles reach into almost every corner of public-facing government provision. Among much else it administers the congestion charge in London, collects the television licence fee, provides blood-transfusion systems to some hospitals and recruits soldiers for the army. If it were to go under, the consequences would be far-reaching.

Mr Lewis is a turnaround specialist who joined the company only in December, just after a previous profit warning. He acknowledges that Capita made many of the same mistakes as Carillion. It expanded too fast, into markets it did not understand, relying on acquisitions to drive growth in a perilously low-margin business. To streamline the company and raise cash to reduce the debt, he wants to sell off two businesses, ParkingEye and ConstructionLine. The company will skip a dividend payment this year, saving £210m. Mr Lewis wants to raise a further £700m by issuing new shares.

If this strategy is executed well, it could be enough to revive the company. Michael Hewson, an analyst at CMC Markets, argues that Capita has two advantages over Carillion: plenty of money (about £1.1bn, against Carillion’s £29m at journey’s end) and a relatively healthy cashflow. Furthermore, given the extent of the company’s contracts, the government will give it “plenty of rope to get through the current difficulties”, Mr Hewson says.

Maybe, but the political pressure will only mount. The Labour Party has called for the government to “oversee the activities of Capita”. There had already been criticism of its pension deficit, which, like Carillion’s, was allowed to balloon even as the company paid dividends. If the economic conditions for outsourcers are difficult, the political ones look harder still.