The public sector is having its very own credit crunch but the IT sector is less concerned

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When the credit crunch struck in 2008 and the banks began to struggle, the IT services market knew it was in for a tough time.

The financial services sector was the life blood for many IT companies and there was suddenly a lot less money at banks to spend.

We all knew that the finance sector would bounce back and be the main source of sales for the IT service provider sector again. But it was strange to hear the words spoken again.

Last week I interviewed Logica's UK CEO Craig Boundy. The company reported decent results for 2001.

As well as speaking positively about the outlook for business this year he even said that the "financial services was a good sector for us in 2010."

To almost quote Ben Kanobi, "now that's a (phrase) I haven't heard in a long time."

But now that the finance sector is back on its feet the public sector, which is the other big sector for IT firms is having its own government concocted credit crunch, known as the deficit reduction.

But the level of fear I could sense amongst financial services IT suppliers during the credit crunch was massive compared to public sector suppliers who today see the deficit reduction as an opportunity.

I suppose that is one of the good things about having not very good technology. Banks have great IT and could not really justify spending more on technology to cut costs and improve efficiency. In contrast the public sector has a lot of room for improvement and IT will play a key role in achieving improvements.

Whenever I speak to suppliers they do say that the public sector cuts will affect them, but they are all reading from the government hymn sheet and talking about how they can help the public sector cut costs and improve service levels. I am sure that secretly they would love the government to throw money at them. 

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This page contains a single entry by Karl Flinders published on February 28, 2011 2:47 PM.

Centrica outsourcing shake-up taking shape was the previous entry in this blog.

Most private sector companies not interested in recruiting former public sector workers is the next entry in this blog.

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