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IT suppliers are "in for a shock" if they rely on public sector

Tony Collins

IT suppliers that have complacently relied on large orders from the public sector are in for a shock, says Richard Holway, chairman of research company TechMarketView.

Holway told the Financial Times today that growth rates in public sector spending on software and IT have outstripped those in the private sector every year for the past decade.

"All that is about to change," said Holway. "Companies that have complacently relied on the public sector [are] in for a shock."

There's likely to be some growth in spending, though, because the need for greater efficiency will generate demand for services which are outsourced to the private sector.

More IT-enabled public sector work may go offshore to India and elsewhere under the pressure to cut costs - though the government has in the past stopped sensitive personal data from being processed abroad.

"Things that were unthinkable a few years ago become a possibility," said Tola

Sargeant, research director at TechMarketView.

TechMarketView warns that "cuts to IT spending, if not done sensibly, could have a significant impact on the delivery of public services".


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