UK public sector boom time for services suppliers


28 May 2003 The government IT market in the UK will grow 30 times faster than the private sector through to 2006, according to Ovum Holway.

The analyst group is forecasting that the UK public sector IT market will grow by an average of 9% per year and be worth £7 billion by 2006. In contrast, the private sector market for IT software and services will grow by just 0.3% per year over the same period.

However, there will be wide variations in growth in different areas of public sector IT spending, with the National Health Service and the criminal justice system growing by 20% and 25% respectively to make up for past under-investment in IT.

The education sector will be a less appealing market. It contracted by 2% in 2002 and will average growth of just 2% through to 2006.

Ovum Holway also suggests that EDS’s supposed dominance of the UK government market is exaggerated.

“Although it has won many mega deals in central government, it does not carry out all the work itself. For example, we estimate that as much as two-thirds of the money generated by the Inland Revenue contract of 1994 found its way to sub-contractors,” said Ovum Holway analyst Georgina O’Toole.

The government attitude to such mega-deals as the Inland Revenue contract has also changed, with public sector procurement managers making more of an effort to attract a broader range of suppliers organised into cross-functional consortia.

“This allows the government to spread its risk across a number of suppliers,” said O’Toole. It also enables the government to select ‘best of breed’ vendors and more easily swap out under-performing suppliers, she added.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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