The demand for software and IT services in the UK public sector shared services market is rising steadily, and will be worth almost £4bn between 2007 and 2012, according to analyst firm Ovum.
Ovum said the market will grow at a compound annual growth rate (CAGR) of 8%, from £489m in 2007 to £729m in 2012.
John O'Brien, author of the report UK public sector shared services: a market emerging, said, "We remain convinced of the opportunities for shared IT services suppliers delivering shared services to the UK public sector over the long term, although we believe the market will evolve at a slower pace than previously expected.
"This plays to the benefit of pragmatic suppliers who have already engaged the market and are prepared to further shape the opportunity over the next few years."
Ovum said suppliers are benefiting from major programmes in central government, such as those at the Department for Work and Pensions, Home Office, HM Revenue and Customs and Department for Transport, as well as a growing number of outsourced programmes among local authorities such as Somerset and Taunton Deane, Suffolk, Liverpool, Glasgow and Worcestershire councils.
O'Brien said, "Suppliers that have been lucky enough to be involved in these programmes have got a headstart. However, the market is shifting as more innovation is brought in to the contractual process.
"The growing use of frameworks could drive both further internal provision and also more outsourcing activity. This means multiple organisations will be able to club together and share in the benefits of new technology and lower costs of delivery in areas such as desktop services, ICT and corporate services."
At the local level, he said, this will help bring in other locally-governed organisations such as emergency services, NHS trusts and education institutions.
O'Brien said, "There is a real sense that momentum has been established, and this will be embedded in project services work such as systems integration, training and maintenance over the next few years."