The latest report from the Office of Government Commerce (OGC) shows that central government and English local authorities spent 7.6 billion on Information and Communications Technology (ICT) in 2009.
The Government accounted for 6.1 billion of the total. The Ministry of Defence (MoD) was by far the biggest spender with a 1.5 billion budget, more or less equal to the total spend of the county councils and unitary authorities.
Next on the list comes the Department for Work and Pensions (947 million) and HM Revenue and Customs (805 million). All these dwarf the 305 million allotted to the Department of Health.
The money is mainly being spent on managed and outsourced services which account for just under a third of the total. This is followed by telecoms and networks.
Both the former Labour government and the current coalition have targeted ICT budgets as prime areas for cuts. The chancellor of the exchequer George Osborne announced plans last May for 95 million cuts in ICT spending but, when it is compared to the 7.6 billion total for 2009, that only represents a drop of 1.25 per cent.
A large portion of the HMRC budget is spent on managed services. Much of that 690 million will benefit Capgemini and it is likely that more departments will be outsourcing to try to manage the cuts without reducing their external services.
One answer that is likely to benefit business services companies is a growing awareness of the benefits of pooling resources. Departments could standardise their back-office functions, such as accounts and payroll, and outsource them as a package.
