Government calls on IT suppliers to cut costs

The Government has asked its top IT suppliers to find ways of cutting costs in an effort to decrease the UK's deficit.

Cabinet office minister and chair of the newly formed Efficiency and Reform group (ERG), Francis Maude, met with chief executives (CEOs) from the 19 biggest Government IT suppliers today to discuss ways of lowering prices on IT contracts.

"Given the really difficult economic climate we now face, we have to do everything we can to deliver better value for money for taxpayers and that involves taking some tough decisions," claimed Maude.

"I am laying down the challenge to major Government suppliers to ask them what they can do to take costs out of contracts. Some of this will come out of margins, but we will also invite ideas on how we can structure things differently to reduce complexity and cost."

Companies involved in the talks include HP, BT, Capgemini, IBM and Vodafone.

However, not all of the IT industry is so positive about the move.

Ferenc Szelenyi, vice president of public sector services in EMEA for Dell, thinks the plans by Maude could damage the relationship between the Government and its IT contacts.

"What the Government fail to understand is that the main benefit of an outsourcing relationship enables them to focus on the work that is core to their value proposition," he said.

"The most successful outsourcing relationships are those that lead to long- term value creation for both parties. It is critical that the Government never lose sight of the fact that the relationship is a bilateral one."

Szelenyi added: "Just as the Government seeks to save money, reduce risk, and/or enhance the quality of its operations, the service provider seeks to earn a profit, build on its service capabilities, and leverage its growing expertise for the future."

It isn't just about what companies want to do, however, and the Government today announced another initiative to enable the public to get involved with how cuts are taken.

Prime Minister David Cameron has teamed up with the creator of Facebook, Mark Zuckerberg, to set up a group on the popular social network where citizens can made their voices and suggestions heard.

In a video conference broadcast on the Number 10 website, Cameron said: "The idea of using a social networking site to help harness people's ideas on how we save money, how we get value for money, and how we meet this huge challenge I think is a great one."

"Normally if Government wants to engage with people, we would probably spend millions of pounds, even billions of pounds on own website. With (Facebook's) help we are basically getting this public engagement for free. That is quite a good start for saving money."

Zuckerberg also claimed to be excited about what this new method could bring to the UK.

He said: "We're really delighted to be in this partnership with you guys in order to harness the energy and the ideas that Facebook users have in order to help the UK public save money."

"It is a really innovative thing that you guys are doing, trying to open up policy making and engage the public in this way to try to create more social change."

The full video can be watched here.