IT workers at service providers face job insecurity in budget job backlash

IT professionals at IT service providers face as much job insecurity as their private sector counterparts. According to a Guardian report 1.3 million jobs could be at risk as a result of the austerity budget.

The figures are based on estimates if the impact the budget could have on jobs.

While up to 600,000 public sector jobs could go a total of 700,000 private sector jobs could be lost, says the report.

This could mean 100-120,000 public sector jobs and 120-140,000 private sector jobs be lost per annum for five years through cuts.

With IT projects in government being postponed or cancelled unemployment in the IT suppliers sector is innevitable.

But Jean Louis Bravard, director at Burnt-Oak Partners, says this could be an opportunity for the government to transform how it does things. This he says could see public sector workers move into the private sector.

He adds that many of the contracts signed by the government are there to cut costs therfore cutting them would not make sense.

 

Also see how the government could be throwing the baby out with the bathwater.

 

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I'm sceptical about the Guardian's estimates of the numbers of jobs at risk - mostly because they underestimate how costly and time-consuming it will be to renegotiate the large contracts that comprise the majority of government ICT spend.

For me, the real story is the impact that the ICT moratorium will have on the small to medium sized enterprises. It means that, for the next 3 to 9 months, pretty much no new ICT contracts will be signed.

For smaller ICT providers, this has the potential to be fatal. A major cashflow hit is difficult to bear if your turnover is modest, and they lack the negotiating power to resist arbitrary price cuts from their biggest customer.

Larger providers are in a much better position, even if it doesn't feel like it. Their contracts are usually long term, with high termination costs, and they will generally have the financial strength to survive a short cashflow problem. They also tend to be delivering the most critical services - the ones that, for all the bluster, public sector customers simply cannot afford to put at risk.

So, when the negotiations start, it will be the smaller firms that are forced to accept blanket price cuts, reductions in scope and long delays before new orders are placed. This will drive SME's away from the public sector, or out of business altogether.

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Kelvin

Thanks for your comment Kelvin. I have done a bog post about your comment because I think it is worth further debate.

Here it is: http://bit.ly/9oIcQl

Karl Flinders

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