Public sector IT spend to slow

The UK public sector software and IT services market will begin to wilt as big government IT programmes slow down, analyst house Ovum predicts.

The public sector market is predicted to grow at a compound annual growth rate of 6.9 per cent between 2007 and 2011, making it worth £11.7bn in 2011, according to Ovum.

But 2007 will see higher than average growth, with the UK public sector software and IT services market predicted to grow by more than 11 per cent this year. Last year spending was up by just under nine per cent at £8.1bn.

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Major public sector projects such as the NHS IT programme and Criminal Justice IT programme have impacted the software and IT services spend over the past two years. But there will be a "significant slowdown" in growth between 2008 and 2011 as many of the existing IT projects slow sharply, according to Ovum.

Georgina O'Toole, lead analyst from Ovum, said in the comparatively lower-growth environment public sector IT suppliers will need to shift their thinking to understand the specific needs of potential customers rather than on winning the next "mega-deal". That will mean more mid-sized deals focused on, for example, application development and maintenance, as well as systems integration and consulting.

She said suppliers fortunate enough to have landed themselves a mega-deal in recent years have benefited most but with fewer mega-deals on the horizon, the market is set to become relatively more attractive for second-tier suppliers, as the UK government puts greater emphasis on exploiting the infrastructure investment of the early part of the decade.