The£50bn cash
injectionmade by the government to bail out
UK banks will lead to a cut in IT spending and reduce the use of
offshore IT suppliers, according to analyst firm
Towergroup.
Bob McDowall, analyst at Towergroup, said all banks
will hold back their tactical and strategic IT investments until
the ramifications of the bail-out are clear.
“Where there are commitments or maintenance
requirements IT spending will go on, but new strategic and tactical
spending will stop until the banking industry evaluates the impact
of the government intervention,” he said.
The government offered up to £50bn cash to
recapitalise UK banks. As a result, it now owns 60% of the Royal
Bank of Scotland (RBS) and would own 41% of a combined
Lloyds TSB/HBOS.
McDowall said when spending does resume there will
be a clear difference in IT investments between the banks that have
taken money from the government and those that have not. “The banks
that are partly owned by the government will scale back more risky
businesses, such as investment banking, which will lead to a cut in
IT spending.”
He added that banks may be forced to reduce the
amount of IT work they push
offshore.
“If these banks offshore a lot of work and make UK workers
unemployed, the government has to pay unemployment benefit, so it
is in the government’s interest to reduce offshoring.”
Last month, the
Lloyds TSB union called on the government to put an end to
offshoring jobs, as a condition of the massive cash injection the
bank has received.
Picture from
Rex Features