UK Government cut down on Legacy Tech Contracts
The weeks seem to be moving so quickly this year, it feels that as soon as I put out the blog I am writing the next one. Well that only means we are working hard and getting things done at EGB and look forward to even further success. Maybe the reason it feels so fast is that there are two birthdays close together, last week mine, this week our Operations Manager Sheree. She loved the gifts and the Beauty and the Beast themed birthday cake that the office gave her.
Onto this week’s blog, it is taking a look into the Public Sector disaggregation of contracts which have started to affect some large businesses. A recently published report by TechMarketView has shown that certain business that handle contracts for the Public Sector are getting hit by the Government’s contract disaggregation. Simply put, the government wanted to remove the Oligopoly that certain business had gained over the IT contacts that the government were offering. To name a couple of the businesses that were affected are: BT and DXC (Merger of Hewlett Packard Enterprises and Computer Sciences Corporation). This would be down to the fact that these two companies held a large share of government contracts.
The hit hasn’t been insignificant either, with DXC’s revenue (Based on TechMarketView’s UK Public Sector Software, IT & Business Process Services (SITS) top 20 ranking) dropping 11% for the year of 2016 to $1.2bn. The BT group saw a drop of 20% in its sales through the public sector coming to £513m, with Serco suffering the worst drop of 45% down to £194m. “It was those that had a large legacy footprint in central government, that continued to suffer heavy declines: most notable are DXC and BT,” said the report.
This could spell out good news for contractors as with these IT contracts being split up maybe some requirements will trickle down to be handled internally rather than outsourced to a company. Or perhaps with small organisations taking on the contracts there will be more chance for Contractors to be assigned. It will take time to tell if there is a benefit, though it may not be realised at all with Brexit on the horizon.
There are some comments that suggest the disaggregation of contracts will come to a pause as Brexit throws too many spanners into the works. The mind set being that it would be far easier to renew current contracts rather than to retender them for different businesses which would be a far more complex process.
It wasn’t all bad news, at least based on the figures, for companies who are part of SITS list. Capita who are on the top of the list had a 3% increase of its Public Sector Sales taking it to 1.8bn, this accounts for roughly 47% of their total sales. Though the report emphasises that this gain is not a true one as “Capita acquired Trustmarque, the software reseller and services arm of Liberata Group in June 2016.” If balanced out would infer reduced revenue rather than growth, so we take that with a little bit of salt.
What are your views on the disaggregation of contracts by the government; do you think it is a waste of time or do you think this will end up providing better services? Whatever your view let us know in the comments below, as always, we are happy to hear from you. I am not too sure where I stand on it, just hope that it means there are more opportunities to help you all get some contracts.
Thanks for reading,