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Public sector IT spending to continue to slow

Karl Flinders

The public sector is reducing its spending on IT with the trend likely to continue as major projects slow down, said analyst firm Ovum.

According to Ovum the public sector software and IT services market grew just under 9% last year with the overall sector worth £8.1bn in spending.

Although the company expects growth to reach 11% in 2008 it anticipates that the slowdown will continue from next year to 2011 as major projects reduce in number. It expects an annual compound growth rate of just 6.9% valuing the market at about £11.7bn by 2011.

"2006 and 2007 continue to be predominantly impacted by the pace of major ICT projects such as the NHS National Programme for IT, the MoD's Defence Information Infrastructure (Future), the Criminal Justice IT programme ('Joined Up Justice') and local government mega-deals," said Ovum.

Georgina O'Toole, lead analyst for the research, said the dynamics of the UK public sector market is likely to change significantly.

"In this comparatively lower-growth environment, suppliers will need to shift their modus operandi in the UK public sector. Account teams will need to be far more adept at understanding the specific needs of customers and potential customers rather than on winning the next mega-deal," said O'Toole. "The winners will be those companies that change their approach to suit the new shape of the market."


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