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Government could outsource IT to India, says Ovum

Kathleen Hall

The government should consider offshoring IT work to India to achieve spending cuts, according to analyst firm Ovum.

The UK public sector offshores little to India relative to the scale of its total IT outsourcing. But Ovum analyst Ed Thomas thinks this could soon change.

"In the past the government struggled because of the political implications of outsourcing to India, but as it looks at costs with greater scrutiny I wouldn't be surprised if we start seeing more contracts coming from this area," he said.

Chancellor George Osborne has told some departments to cut costs by up to 40%. With many public-sector staff employed in IT and back office jobs, offshoring could signal tens of thousands of job losses.

In his visit to India, David Cameron said Britain was one of the most progressive countries in terms of being open to outsourcing. But no Indian firms were present in a recent meeting with the government and its top IT suppliers.

A recent report found the number of global IT service deals bounced back in the second quarter, with an increase of 14% compared with the previous three months. However, total contract value declined by 14% to $30.8bn.

"Since the recession, companies have become more wary about signing long-term outsourcing contracts. There has also been a trend to using multiple vendors as businesses become more savvy about how they use outsourcing, so rather than sign one large deal, they'll sign three smaller ones with more specialist vendors," said Thomas.

However, most IT contracts are still made up of public contract deals, he added.


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