In a brutally honest update on the firm's position, chief executive Jonathan Lewis described the government contractor as "too complex" and "driven by a short-term focus", adding it "lacks operational discipline and financial flexibility".
Just two weeks after rival Carillion collapsed under a weight of debt, Capita said it needed to restructure and retrench after lowering its 2018 profit by 30 per cent, or around £120 million, only 7 weeks after the company had reiterated it.
Shares in Capita were down 39.56 per cent at the time of writing.
It employs around 73,000 people.
In October of the same year, the Central Bank fined the group's Capita Life and Pensions Services (Ireland) unit €1.15 million for acting as an investment business firm for nearly a decade without proper authorisations from the regulators in Republic.
Britain's main opposition Labour Party called for the government to take steps to oversee Capita, a major beneficiary of public sector contracts.
Shares in Capita have fell by over 40% this morning after the outsourcing firm announced it had suspended its dividend and initiated a multi-year transformation plan..
The shake-up would also involve selling non-core businesses, including ParkingEye and Constructionline, with Capita warning that the cost measures would not be enough to help shore up 2018 full-year profits which were now forecast to come in between £270m and £300m.More news: Bombardier win trade case against Boeing in US
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Jon Trickett, Labour's shadow minister for the Cabinet Office, said: "We can not afford another Carillion".
Carillion, which built large infrastructure projects, was largely brought down by problems on a number of its construction contracts and not the day-to-day provision of services.
"These headwinds are particularly expected to impact upon the financial performance of the Private Sector Partnerships, in both Insurance Services and Customer Management, Public Services Partnerships and IT Services division".
Capita, meanwhile, did not specify which contracts were problematic but pointed to a lower number of new contracts being awarded for smaller amounts, in a more sluggish business operating environment.
"Similarities with Carillion are all too clear but action, however painful, is better than fudging numbers", said Neil Wilson, senior market analyst at ETX Capital.
"We will seek to reduce the remaining deficit as a priority", it said.
Capita has underinvested in the business and there has been too much emphasis on acquisitions to drive growth.
Lewis, who took up the job on December 1, said: "We are now too widely spread across multiple markets and services, making it more challenging to maintain a competitive advantage in every business and to deliver world class services to our clients every time".