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Government departments spent £4.4bn on technology in 2020, showing an increase in spend from £4.2bn in 2019, according to a report from Tussell.
The report on the central government IT market found that HM Revenue and Customs (HMRC), which has several large ongoing technology programmes, including Making Tax Digital, spent £3.5bn on IT between 2016 and 2020.
In January 2021, the Public Accounts Committee (PAC) criticised the department for spending too much money on patching old legacy IT systems, and the department secured secured £268m in government funding to modernise its IT through the November 2020 spending review.
Data from the Tussell report found that HMRC “appears to be more reliant on its top IT supplier” than other departments, having forked out £1.9bn between 2016-2020 on supplier Capgemini.
The department has a long history with the supplier, stretching back decades. HMRC has worked with Capgemini on what was previously known as the Aspire contract, but as part of a contract extension in 2019, it changed the way it works with the service provider to support its technology sourcing programme.
Capgemini mainly provides data, digital and cloud technologies, alongside applications management services, and its extension with HMRC is due to expire this year.
HMRC has also spent £283m on another large supplier, Accenture, between 2016-2020, according to Tussell.
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Atos also features heavily in departments’ top spend, with the Department for Work and Pensions (DWP) having spent £791m on Atos between 2016-2020 and the Ministry of Justice (MoJ) spending £395m on the supplier during the same time period.
Overall, the top 10 largest government suppliers earned over 60% of the total spend on IT by government departments between 2016-2020.
The time period saw significant IT spend, with the government spending £2.46bn on Capgemini, £2.41bn on Atos and £2.31bn on Capita. Other large suppliers raking in government money during this time period include IBM, DXC Technology, Accenture, CGI, Sopra Steria and Oracle.
The Tussell report added that these strategic suppliers are “a crucial route to market for small and medium-sized enterprises”.
Despite large spend on the big IT companies, the Tussell data also shows that departments are committed to disaggregate large contracts. The market share of the top 10 IT suppliers have decreased significantly over the last few years, from holding more than 70% of the market share based on spend value in 2016 to 44% in 2020. Mid-cap IT companies have been the biggest beneficiaries of the changes in the market, while SMEs have had a slight increase in market share, from around 5% in 2016 to 15% in 2020.
The Tussell data found that most IT related contracts awarded by central government have gone through 10 different frameworks since 2020.
The most popular continue to be the latest iterations of G-Cloud, G-Cloud 11 and 12 which has seen 389 contracts awarded, worth a total of £469m and 271 contracts worth £398m respectively since 2020. Data from Tussell also shows that over the next 18 months, nearly 6,000 government contracts worth a total of £5bn are due to expire.