Ј8.5bn Council Outsourcing Pipeline to Drive Government IT Spending

The public sector is the most attractive market for software and IT services vendors in the UK in 2009, with local government outsourcing programs a key growth driver.

Major IT and back-office outsourcing programs in the UK local government sector will help drive a 3.7% increase in software and IT ser-vices (SITS) spending in the UK public sector in 2009.

Figures recently published by Pierre Audoin Consultants (PAC) in partnership with TechMarketView (TMV), the new venture by leading sector analysts Richard Holway and Anthony Miller, reveal that, at 3.7%, UK public spending on SITS will be the fastest-growing vertical market. In contrast, overall UK investment in software and IT services is forecast to fall by 1% in 2009.

One of the key growth engines will be investment in new outsourcing and shared services programs by local government organizations as they respond to Central Government mandates to deliver improved levels of public service despite a reduction in tax income resulting from the recession.

PAC has identified more than Ј8.5bn worth of new outsourcing contracts that are set to be awarded by UK local government organizations over the next two years. The largest single opportunity will come in Essex, where the council has short-listed two consortia led respectively by IBM and T-Systems to outsource ‘any or all’ public services as part of a deal potentially worth up to Ј5.4bn. The Essex deal will follow other recent large council outsourcing engagements, including South Tyneside (Ј300m deal with BT Global Services), Glasgow (Ј256m deal with Serco) and Birmingham, which is aiming to save Ј1bn over ten years through a deal with Capita.

In the Central Government area, IT spending will continue to be driven by the National Identity Scheme (NIS). Two contracts have already been awarded, with Thales winning the Ј18m interim National Identity Register contract, and IBM the Ј3m immigration casework management contract. However, the largest parts of the framework are all yet to be awarded. These include the Ј350-Ј400m Application and Enrolment contract, the Ј250-Ј350m Card Design and Production contract and the Ј200-Ј250m National Biometric Identity Service contract. 

With all three of these contracts due to be awarded in 2009, the National Identity Scheme alone is set to drive considerable growth in IT expenditure this year. With other government IT programs such as FLIS, MIDAS and Ocean also in the pipeline, PAC expects many SITS suppliers to offset pressure in the commercial segment with an increased focus on public sector opportunities.

About Pierre Audoin Consultants (PAC):

PAC is a global market research and strategic consulting firm for the Software and IT Services Industry (SITSI). PAC helps IT vendors, CIOs, consultancies and investment firms by delivering analysis and advice to address a range of growth, technology, financial and operational issues.

Our 30+-year heritage in Europe – combined with our US presence and worldwide resources – forms the foundation of our ability to deliver in-depth knowledge of local IT markets, anywhere. We employ structured methodologies – undertaking thousands of annual face-to-face interviews on both the buy and sell side of the market, as well as a bottom-up, top-down approach – to leverage our research effectively.

PAC publishes a wide range of off-the-shelf and customized market reports –including our best-selling SITSI® program – in addition to our suite of strategic consulting and market planning services. Over 160 professionals in 16 offices –across all continents – are delivering the insight that can make a difference to your business.

For information on the article, please contact:

Dominic Trott
Tel: + 44 (0) 20 7553 3964

Press Contact:
Shelly Wills
Group Marketing Coordinator
Tel: +44 (0) 20 7251 2810

Source: PAC

    Popular posts

    Related posts