Andrey Popov -

Public sector spend on IT climbed to £12.6bn in 2021

Public sector bodies IT spend went up 10% last year, but the majority of the money went to large IT suppliers with 89% of the total spend going to so-called ‘tech titans’, according to a report from Tussell

Government and public sector bodies continue to increase their IT spend year on year (YoY), according to a report by Tussell, which found that so-called “tech titans” hold almost 90% of the market share.

Figures from the report show that public sector bodies increased their IT spending by 10% last year, from £11.5bn in 2020 to 12.6bn in 2021. However, 89% of that money, or £11.3bn, was spent with one of the 150 largest IT suppliers.

Many of the contracts, worth a total of more than £2.5bn, were won through large frameworks, according to Tussell.

The remaining market of £1.3bn was split among the long tail of 5,298 other IT suppliers, the report said, adding: “If this trend continued into 2022 once all the data is in, then 9 in every £10 spent on IT in the public sector will go to one of these 150 companies.”

These 150 tech titans include household names such as Atos and Capita, with the latter topping the list in terms of direct public sector revenue, with Atos following behind in second place. Computacenter, Capgemini, BT, Leidos, Fujitsu, Bytes technology, Softcat and IBM also feature in the top 10.

One of the biggest IT spenders in government, HM Revenue and Customs (HMRC), spent 32% of its IT budget with Capgemini. However, tech titans also include fast-growing small and medium-sized enterprises (SMEs) that are getting large slices of the market such as Palantir, a company best known for its role in the data integration of the NHS Covid-19 data store.

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.

HMRC also spent 28% of its IT budget with Fujitsu in 2021. In 2020, the department signed a five-year £169m deal with the supplier for virtual managed environment platform, following its role as an incumbent provider to the department under two different contracts.

The NHS’s share of IT spend has also increased quickly since the beginning of the Covid-19 pandemic, the report found, as both local trusts and NHS central bodies continue to heavily invest in digital technologies.

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