Serco has said it expects to make higher profits during 2023 after reporting rising demand for workers to run immigration services for the UK government. Robust demand for immigration services has more than made up for the drop-off in contracts related to the Covid pandemic, Serco said in a statement to the stock market, as it raised its profit guidance. Shares in the outsourcing company rose by 10% on Thursday, making it the top riser in the FTSE 250 index of mid-sized businesses. Serco runs an array of immigration services on behalf of governments in the UK, Australia and other countries. Its services range from border control and detention centres to housing and welfare support. In the UK more than 50,000 asylum seekers are being housed in nearly 400 hotels at a cost of more than £6m a day, according to a government source cited by the BBC. The facilities are in demand because of a record backlog of asylum cases. The work detaining people seeking asylum can be very profitable but Serco has also faced repeated controversies over conditions at the facilities it operates. The UK immigration minister, Robert Jenrick, met Serco executives last month to discuss a riot at Yarl’s Wood, a detention centre north of Bedford. Sources working at Merseyside hotels run by Serco, which were used to house people seeking asylum last month, told the Observer they believed there was a culture of “institutional abuse”. Serco strongly denied the allegations, saying they were “without foundation”. It is not just the UK where immigration services are profitable. The company said its underlying trading profit was expected to increase by 8% to at least £140m for the first half of its financial year in part due to “particularly strong growth in the immigration sector” internationally. A recently acquired European immigration business has also made more than expected. For the full year, the company expected to make profits of about £245m, 3% higher than 2022 and 4% more than previously estimated. Revenue is expected to be at least £4.8bn, which would be about 6% higher than the £4.5bn reported in 2022. Mark Irwin, Serco’s group chief executive, said the company had achieved “a strong start to the year, including robust demand for immigration services” and “growth in defence services”. He added: “Governments around the world are increasingly looking to us to help them with the complex and difficult challenges they face, and our enhanced focus on customers, colleagues and capabilities enables us to respond to their needs. This is driving growth in a number of areas of our international business and enables us to upgrade our guidance for the year.” Serco expects revenues of roughly £2.5bn in the first half of 2023, up 13% compared with last year, even though 2022 sales were swollen by Covid contracts such as looking after parts of the UK government test-and-trace effort.