PublicSector - The Longer View

Although UK Public Sector SITS Market Trends & Forecasts 2010 is the first PublicSectorViews report to be produced by TechMarketView LLP, the ‘team’ has been analysing the UK SITS scene for several decades. Back in 1997, when Labour came to power, the public sector represented 21% of the UK SITS market. The private sector had actually been increasing its share of the market for most of the 1990s. Indeed, the added stimulus of the dotcom boom and the additional expenditure on the Y2K ‘bug’, actually meant that the public sector only represented 19% of the UK SITS market by 2000.

But then everything changed. The UK SITS sector entered three years of decline as the bubble burst. Private companies had brought forward spend pre-Y2K and now a combination of ‘Make Do and Mend’ and ‘More for Less’ (two of our dominant themes for the last decade) took over. But the initial restraints of the incoming Government went out of the window as they entered their second term. Grand projects were the order of the day. Public sector expenditure soared.

The UK SITS sector rubbed its hands with glee. I just cannot count the number of times that CEOs said to us “Thank goodness for the public sector!” during both private and public sessions. Growth rates in public sector SITS exceeded those in the private sector for every year in the last decade. The proportion of the market represented by the public sector grew from 19% to nearly 30% in ten years. The very best performing SITS companies were those with the highest exposure to the public sector. Indeed, we had grown very uneasy as some of the leaders in the UK SITS rankings made 50%+ of their revenues from the public sector. 

But, as you will read in this report, all that is about to change. Whichever party forms the Government post the 2010 General Election, public sector SITS growth rates will fall. Indeed, fall below those from the private sector. Those companies that have complacently relied on the public sector are in for a rude shock. Even the contracts already let will be renewed for keener prices – and not necessarily with the incumbent supplier. The days of the mega IT contract are gone and every piece of new business, however small, will be the subject of intense competition. Even the days of “More for Less” are coming to an end. “Less for very much Less” might well become our new slogan.

Life in the private sector will not be easy either. Fasten your seatbelts and Drive carefully – the road ahead is rocky indeed.

Posted by Richard Holway at '07:56'