A profit warning announced by Cable & Wireless Worldwide (CWW) was blamed on cuts announced by the UK government.
CWW was one of the 19 suppliers that were at a meeting with Cabinet Office minister Francis Maude earlier this month to work out where savings can be made.
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CWW said in the first quarter its business was "broadly in line with plan." But the company is warning that it will be affected by the government cuts.
"Following the new government's Emergency Budget in late June, non-contracted spending in the UK public sector has slowed very significantly. Given the nature of our public sector business, this reduction will adversely impact trading in the current year," said the company in a statement.
The company said it supports the government plans and believes it will benefit it in the longer term.
It has implemented plans to cut costs. "In light of the downturn in public sector activity, we have stepped up our cost reduction initiatives and now expect total operating expenditure to reduce year-on-year."
Mark Lewis, outsourcing lawyer at Berwin Leighton Paisner, said this will not be the first profit warning from government IT suppliers. "It is the mid-sized companies that don't have much business outside the UK that are most at risk." He says this will include small IT service providers and SAP integrators.