Public sector continues to lead in IT spend

Nine per cent annual growth until 2009, say figures from Ovum

The public sector is still the IT industry's big spender, and will continue to be so for another four years at least, according to the latest forecasts from analyst Ovum.

Figures seen exclusively by Computing predict public sector technology spending growth of nine per cent per year until 2009, compared with less than four per cent in the private sector.

Growth this year alone has outstripped expectations and is running at 13.5 per cent, compared with projections of around 11 per cent.

The market will be worth £7.6bn by the end of this financial year, and £10.7bn by the end of the forecast period in 2009.

The biggest single factor pushing up spending for 2005 is an increase in large-scale business process outsourcing (BPO) contracts in the local government sector, says Ovum analyst Tola Sargeant.

'We've seen more large transformational BPO deals coming through from local authorities than we envisaged in our last forecast, earlier this year,' said Sargeant.

'Moving from internal provision by local authority IT teams, to external provision by outsourcers, releases new money into the market.

'So there is a big impact on growth but it is not inconsistent with pressure on budgets, funding issues and consideration of how to meet efficiency targets,' she said.

A major factor driving future growth is central government plans such as the multi-million pound eBorders system and the multi-billion pound ID cards scheme.

But the biggest growth sector is education.

Procurements have already started fro the technology element of the 'Building Schools for the Future' programme. And while individual deals may be relatively small, the overall initiative will be worth around £4.5bn over the programme's 15-year life, says Sargeant.

'The public sector is still acting as the life buoy for the UK software and services sector,' she said.