Public sector outsourcing to grow

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Transformation projects in the public sector are fuelling growth of 10 per cent in outsourcing ICT and business processes to £5.97 billion in 2008, research firm Kable has said.

The growth next year will be followed by rates of six to eight per cent over the next four years, hitting about £7.53 billion by 2012, driven by national security projects and local government outsourcing.

The report said that this year has seen less new business, but it has seen the beginnings of sales processes for next year. "This is a cyclical market and things are relatively quiet compared to how they have been and how they will be," said Kable's associate director Seyi Agboola in a statement. "So the decisions that suppliers take over the next two years will determine the next generation of leaders in this market."

IT outsourcing accounts for £3.71 billion of the market this year, compared to £1.56 billion from business process outsourcing (BPO - such as human resources and back office functions. But IT outsourcing will grow at a slower rate than BPO, reaching £4.48 billion in 2012 compared to £3.04 billion for the latter.

The report said as police forces move to outsourcing, the justice sector will move into third position in the market worth £1.26 billion by 2012, overtaking the healthcare sector - currently massive because of the NHS national programme for IT.

The public sector IT market will remain dominated by central and local governments, expected to be worth £2.04 billion and £1.79 billion by 2012 respectively.

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