Mouchel, the outsourcing company, saw its shares drop 30 per cent yesterday after it scrapped its dividend and reported a sizeable full-year loss.

Mouchel experienced a sharp drop in demand due to the change of government in May. The company specialises in developing infrastructure for councils and government agencies and has been affected as departments cut down their spending and scaled down projects.

In response, the company rolled out a restructuring programme, taking the number of job cuts since 2009 to 2,000 and creating a larger-than-expected one-off cost of £45.2m.

The company is hoping that the Coalition Government's Comprehensive Spending Review, will create a new demand for outsourcing businesses in the hope of saving costs. The group also offers consultancy services and is also aiming to expand in new areas such as the health sector and police and educational centres, in an attempt to attract new clients and contracts.

Richard Cuthbert, CEO of Mouchel, said: "Mouchel believes that pressure on the public sector to reduce costs will lead to greater demand for private sector support."

The group said it had an order book of £1.8bn, and has put in proposals for £2.2bn for additional business.