Councils to drive government IT spending

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An analyst firm today identified £8.5-billion worth of new, local government outsourcing projects it said would drive UK public sector IT spending this year.

Pierre Audoin Consultants (PAC) said major IT and back-office outsourcing programmes in the UK local government sector will help drive a 3.7 per cent increase in software and IT services spending in the UK public sector in 2009, despite the recession.

In fact, local government spending plans will help push UK public sector spending to become the country’s fastest-growing vertical IT services market, at a rate of 3.7 per cent this year.

By contrast, PAC predicted that overall UK investment in software and IT services would decline by one per cent during the same period.

This local government spending will be in response to “central government mandates to deliver improved levels of public service despite a reduction in tax income resulting from the recession,” it stated.

It added that the £8.5-billion worth of new outsourcing and shared services contracts it identified would be awarded within the next two years – the largest of which will be in Essex, for example.

Essex County Council has shortlisted two consortia led by IBM and T-Systems to outsource “any or all” public services as part of a deal, potentially worth up to £5.4 billion.

When it came to central government spending, PAC said the National Identity Scheme (NIS) would drive considerable IT software and services spending growth this year.

Thales has already won the £18-million interim National Identity Register contract, while IBM was awarded £3-million immigration casework management contract.

But analyst said the largest parts of the NIS framework are all yet to be awarded, including the £350 to £400-million application and enrolment contract, the £250 to £350-million card design and production contract, and the £200 to £250-million National Biometric Identity Service contract.

“With other government IT programmes such as [national security emergency framework] MIDAS and [communications networks project] Ocean also in the pipeline, PAC expects many SITS suppliers to offset pressure in the commercial segment with an increased focus on public sector opportunities,” it added.

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