* H1 pretax profit 101.4 mln stg vs 83.4 mln
* Says in talks with government on how to help cut costs
* Order book down to 16.7 bln sterling vs 17.1 bln sterling (Recasts headline)
By Golnar Motevalli
LONDON, Aug 25 (Reuters) - British outsourcing company Serco Plc posted a 21 percent increase in half-year pretax profit and said government spending cuts would boost sales in areas where outsourcers would be hired to achieve savings.
Serco, which runs prisons in Australia and London's new cycle hire scheme, said on Wednesday pretax profit for the first half to June 30 was 101.4 million pounds, against 83.4 million last year.
Support services companies with significant exposure to government contracts are bracing for Downing Street's October Spending Review, which will outline the extent of the coalition's drive to cut public spending.
Serco said it and other companies used by the government were in talks with government officials about how to help achieve its cuts.
"(The government) have called us in to say 'where can we save money?' We see Serco as a big partner to governemt, we still see them as a very strong customer, they see us as a very strong supplier," Chief Executive Christopher Hyman told Reuters.
Areas such as prisons, where Justice Secretary Kenneth Clarke wants to cut costs and reduce the number of offenders on short-term sentences, could provide Serco with more opportunities to bid for contracts.
Britain's National Health Service is also under pressure to look to the private sector to make efficiencies.
The coalition government's decision to scrap Regional Development Agencies (RDAs), will hit Serco's contracts with Business Link, the government's free advice service for people starting businesses, the company said.
Hyman said plans to double the size of the Welfare to Work programme which helps the jobless back into work, would offset any losses from winding down RDAs.
"We continue to expect, in 2010, strong organic revenue growth and further progress towards our 2012 margin guidance, and, by the end of 2012, an increase in revenue to approximately 5 billion pounds," the company said in a statement.
Hyman said the United States was the most likely target market for further acquisitions, especially in cyber security where the Department of Defense wants to increase investment.
The company raised its dividend per share by 18.9 percent to 2.20 pence.
Shares in Serco were up 3 percent to 576.5 pence at 08:24 GMT.
For more stories on the British government's spending squeeze, click on:. (Editing by Rhys Jones and David Cowell)