"Public sector growth will almost certainly save some companies from having to axe thousands of people," said Kable's research director Paul Smith. "It will not create jobs, it will save jobs."
Smith said the process has already begun, with large IT services firms such as EDS and ITNet starting to move IT staff out of vertical sectors such as telecoms and into the public sector. He predicted that staff with skills that are already well established in the private sector, such as electronic document management, will be in big demand in the public sector.
"This is a really good time for the public sector to be contracting with the private sector. It is a good time for both sides to come up with good contracts," said Smith.
Government IT expenditure will increase by 25% to £12.4bn over the coming year, with the biggest winners being healthcare (84% growth); central government IT spend (25% growth); and defence (17% growth).
In July, the Government earmarked an additional £2.4bn for investment in IT over the next three years.
In its report, UK Public Sector ICT Spend: October 2002 Outlook, Kable said the key challenge for the public sector and its IT suppliers will be to ensure that new IT is implemented successfully.
This will require a strong emphasis on project management, change management, and a customer-centric approach based on a radical improvement in back-office links and improved front-end service access, the report said. "We are way off true
e-government in the sense of making it truly customer-centric," said Smith.
The report also urged public sector bodies to form more realistic relationships with their partners. Smith said public sector bodies should accept that firms are out to make a profit, although the stress should be on a "reasonable" profit, he said.