Government IT takes a hit but silver lining for contractors

Tuesday 24 September 2013

For contractors in a range of industries, the public sector has often proved to be a useful source of assignments. As government institutions have undergone major structural and technological changes, IT contractors have been among the main beneficiaries. But as budgets have come under pressure in recent years, conditions have become tougher, as the latest Market Trends and Forecasts report from TechMarketView illustrates.

According to the research, the public sector software and IT services (SITS) market contracted by two per cent over the course of last year. Although this is a relatively small decline it is nonetheless noticeable, taking the size of the market as a whole to £11.3 billion. Moreover, it contributes to a trend which will see the market worth £644 million less this year than it was in 2010.

Central government is the main driver of decline, the research shows, with IT spending one of the key budget areas under pressure to cut costs. With more responsibility being given to the Cabinet Office for public sector procurement practices, this has become particularly acute.

However, it appears that IT contractors may be the unlikely winners in this period of transition. TechMarketView says that it expects the pace of reform to quicken, meaning that changes to purchasing will surge ahead. Among these measures, the government is seeking to put smaller contracts out to tender and widen access for small businesses, which suggests that  contractors with the right skills and experience could actually be heading for a wider range of opportunities in the coming years.

Equally, widespread technological change across public sector functions is likely to ensure continued demand for IT professionals. The research says that use of cloud services will continue to increase in the next couple of years, indicating that there could be demand on the horizon for expertise in this field. At the same time, TechMarketView says that businesses looking to win government contracts will need to understand the extent to which new systems are being embraced in different departments and functions. In particular, they will need to have knowledge of technology supporting the mobility agenda, as well as channel shifting and digital service delivery as key government functions begin to be carried out online.

A look at the public sector as a whole indicates that demand for IT contractors is unlikely to die away. Major structural changes in the NHS mean that migration specialists and other skilled professionals who can ease the transition will still be highly sought for some time. Similarly, the health service has recently been given a new procurement framework, which set out plans for hospitals to publish details of their spending on specific equipment - a new price comparison website will also be established allowing them to find the best options among suppliers. These online services are likely to ensure that web developers and a host of other technology workers continue to enjoy strong demand.

If contractors and small businesses want to obtain public sector work, the report says they will need to have an in-depth understanding of the changes and future of government purchasing practices. Beyond that, argues TechMarketView, they will need to revisit their approaches to commercial operations and service delivery so they can adapt to a new business environment.

By Victoria McDonnell

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