Cable & Wireless was the first supplier, which recently met the government to discuss cost cutting, to come out and state the obvious. That profits would be impacted, in a negative fashion, by the government cuts in spending.
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“Following the new government’s Emergency Budget in late June, non-contracted spending in the UK public sector has slowed very significantly. Given the nature of our public sector business, this reduction will adversely impact trading in the current year,” said the company in a statement.
Now Capita, which also attended the government meeting, has come out and said: “current pressures on public spending may potentially affect growth in the short term,” in its latest results statement.
But these two and the other top suppliers can probably weather this type of storm
But according to Mark Lewis, a Lawyer at Berwin Leighton Paisner specialising in outsourcing, it is the mid sized and small IT forms that depend on UP public sector business that could be hit the hardest.
Could this be bad end users. The disapearance of smaller suppliers will reduce competition, wipe out some service innovation and hit SME IT users the hardest.