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By Sally Watson, 25 November 1999 00:20

NEWS Businesses are paying up to 40 per cent too much for their IT services without questioning results, one leading vendor is claiming this week. Guil Hastings, managing director of Mastech Europe and Africa, estimated that in the last 15 years, UK companies have been overcharged by a total of almost £4.5bn. Hastings added that companies are prepared to pay extortionate rates for year 2000 services in the last minute rush before 1 January - and suppliers are guilty of exploiting that panic. "We have heard of some time and materials rates being quoted for £3,000 per week for resources that would normally cost a third of that. It is extortionate and shouldn't be happening," he said. But Mike Thompson, research director at the Butler Group, said the situation has been greatly exaggerated. "The IT industry is no different from any other business," he said. "It's a simple fact of economics - if it was too much people wouldn't pay for it," he said. According to a Mastech spokesman, the claims are based on an in-depth knowledge of the market. "We know the margins they [service companies] must be making. People in senior business positions are often not technical and don't understand they are using a sledgehammer to break a nut," he said. David Taylor, president of IT director's organisation, Certus, agreed there may be some services companies in the market charging over the odds, but claimed the majority of suppliers genuinely want to work with companies to find the best and most cost-efficient solution. "Many suppliers face bizarre situations because the project they were originally brought in for is not what the customer really needs. The most important thing is to bring together suppliers and customers to improve communications and share risk," said Taylor.