Techmarketview recently surveyed a selection large and small IT firms that rely on government contracts to ask them how they think the government spending cuts will affect them.
The UK software and IT industry relies on the public sector for nearly a third of its £33bn in revenues. But existing government contracts are being scrapped or renegotiated, and new contracts are being capped at a relatively small £100m.
To their surprise, both the large firms and small firms such as IT contractors with their own limited company, were still fairly optimistic and believed it would not have a detrimental affect on them. However, they cannot both be right.
David Chassels, who runs a small IT company believes IT contractors offering their services direct to the public sector are likely to win contracts as the new government no longer wants to pay what big IT suppliers charge and are looking to spend more wisely.
Georgina O’Toole from research firm Techmarketview believes that big players are still confident because the government has no choice but to continue doing business with them.
“IT companies cannot just back away from government projects, because they would lose too much business. But government cannot back out either – it will still have to rely on suppliers.”
BBC News comments;
“The irony remains that both big and small IT suppliers want the government to stick to its guns, even though at least one of them is in the firing line. But the big IT companies could well be bluffing.”
