Government IT spending expected to drop

Analyst firm Ovum is warning that UK government IT spending will drop sharply over the next three years.

Public sector spending grew by nine per cent in 2006 and will hit 11 per cent in 2007. But analysts are expecting the growth rate to slow to nearly half that, 6.9 per cent, in 2008-2011 to nearly £12bn.

Georgina O'Toole, lead analyst for the research, said: "From 2008, the dynamics of the UK public sector market are likely to change significantly."

"Suppliers fortunate enough to have landed themselves a 'mega-deal' in recent years have benefited most.

"However, with fewer mega-deals on the horizon, the underlying market is set to become relatively more attractive, particularly for second-tier suppliers, as the government puts greater emphasis on exploiting the infrastructure investment of the early part of the decade."

Spending has been boosted over the past two years by mega-deals such as the NHS National Programme for IT, the Defence Information Infrastructure, the Criminal Justice IT programme and local government deals.

O'Toole predicts that smaller projects, such as application development and maintenance, as well as systems integration and consulting, will make up the bulk of spending.

Meanwhile, the growth rate for the total UK IT sector is also expected to slow to 5.8 per cent.