Public Sector IT Cuts

There has been a lot of talk in the news recently about the Public Sector job cuts with a reported £800million in savings set to be made out of the government’s preferred outsourcing and IT suppliers. July saw the start of negotiations with the nineteen biggest suppliers to the public sector, including Capita, BT, IBM and Serco with talks on cost cutting ideas and shrinking contracts, all in a bid to reduce state spending by £6.2 billion.

But, with the new coalition government keen to encourage more SMEs to the public sector by making the tender process easier and more open to them, this could be a positive turn of events as it would be more cost effective for the public sector to negotiate with suppliers direct on a case by case basis rather than tendering to the large consultancies.

Having said this, we have yet to seen any major changes in the procurement process, so government bodies are still missing out on some of the best IT suppliers who could prove to be more cost effective at a time when the public sector is closely monitoring their spend and reducing budgets. However, the emphasis for now remains on reducing specifications within existing contracts.

Only 4% of new IT jobs are in the Public Sector at present as many IT projects are put on hold or cancelled completely such as ID Cards and the Child Protection database Contact Point, all in preparation for the big spending review next month (Oct).  On a positive note, as the public sector fail to replace or hire permanent IT staff, IT contractors will be their preferred option giving them more flexibility to hire on an ‘as and when’ required basis. It will be very interesting to see what is said in the official spending review in October when we can expect far more detail on how these savings will be made, giving a greater indication of how this will affect the IT industry as a whole.

Ross White, Senior Consultant (public-sector), Vector Resourcing Ltd