Capgemini won more work from the UK public sector than any other IT company last year, earning £1.2 billion of £4.6 billion spent on IT in 2014 alone, according to data analysis startup Spend Network.
The vast majority of Capgemini’s revenues came from its Aspire contract with HM Revenue & Customs, which earns it over £800 million a year.
However the company is unlikely to keep the top spot for long. Aspire is due to expire in 2017 and is set to be replaced by a number of shorter, more flexible contracts instead.
If successful, the plan to replace Aspire could radically shake up the current landscape of tech suppliers to government and help HMRC save at least 25 percent of its IT costs, according to HMRC's CIO Mark Dearnley.
But who could take Capgemini’s top spot?
And, given the government’s aim to spend 33 percent of Whitehall money with small and medium sized businesses – indeed it claims to have met already met a target of 25 percent - when will we start to see the spoils shared more widely?
Capita has had a remarkable amount of success in the UK public sector in the last year or two: its revenues from government are up by 11 percent.
It has seen sales shoot up by a quarter from 2012 to 2014 (£670 million total sales in 2012 to just under £1 billion last year) despite virtually no change in total IT spending year-on-year.
Capita is now the second highest-earning IT supplier to government and earns about £1 in every £5 the public sector spends on IT.
Unlike Capgemini, its revenue is fairly evenly split between central and local government, according to Spend Network’s figures (however these stats do not include the NHS, police or other blue light services).
Capita dominates the local IT market. The firm earnt more than double that of its closest rival, Mouchel, between 2012 and 2014.
But its recent success has also come from central government, where it has picked up major contracts with the Department for Work and Pensions, amongst others.
Although HP still does very well out of the UK government, the overall picture is one of decline.
Its revenues have dropped steadily in recent years from £750 million to £640 million to just over £500 million last year: an 11 percent drop.
HP has suffered as a result of its reliance on central government for 93 percent of its public sector revenues, analysts TechMarketView said in a report last year.
It is the IT supplier most impacted by the Cabinet Office’s policy of breaking up major legacy IT outsourcing contracts into smaller contracts with a range of providers, according to the report.
It won a three-year hosting service from the Department for Work and Pensions at the start of 2015 (controversially awarded without a competition) but it will be hit by the anticipated loss of two major contracts worth £115 million with the DWP next year.
HP is unlikely to ever recover its position at the top of the leader board again, though it probably won’t ever fully withdraw from the UK government sector either (that said, that isn’t completely unforeseeable…the company as a whole is not in great shape, as recent layoff figures show).
Atos' revenues dipped slightly last year but generally it has been one of the few steady performers in the UK public sector in recent years.
It has earnt almost £500 million every year since 2012, although revenues dropped very slightly (by two percent) over that period: from £490 million to £460 million.
The vast majority of its government income comes from Whitehall, but Atos is actively trying to win work across a wider range of government sectors.
Despite official efforts to reduce dependence on a small clutch of system integrators within central government since 2010, Atos still seems to be doing reasonably well out of the UK public sector.
It recently won a £6 million contract with Transport for London and a £125 million contract with the Ministry of Justice in November 2014, partly helping to mitigate for exiting its controversial ‘work capability assessment’ contract with the Department for Work and Pensions in March 2014.
In central and local government, IBM is in the poorest shape of any of the top five companies.
Its revenues have plunged by 14 percent from 2012 to 2014: a drop of £471 million to £296 million. It still has a number of local contracts and some deals with the Home Office, Department for Transport and other departments but the overall trend is negative.
IBM is performing more strongly in the NHS, which was not included in Spend Network’s figures.
While the fortunes of the top five are generally in decline, spending on IT is very slightly up according to Spend Network: in Whitehall by 0.4 percent since 2012. So who’s winning the work (besides Capita)?
Mid-sized companies like Computacenter (revenues up seven percent), Advanced Computer Software (up 25 percent) and Allocate (15 percent growth) are starting to outperform the big beasts, according to TechMarketView’s 2014 report.
The Cabinet Office claims to have met a target to spend 25 percent of Whitehall money with small and medium sized enterprises, although there has been a lot of scepticism about the validity of its figures.
But there have been some successes: G-Cloud has brought a whole host of new companies into government, for example BJSS, Skyscape, Valtech and Kainos, to name but a few.
A number of smaller Whitehall departments like the Cabinet Office and HM Treasury have replaced single supplier contracts with a clutch of smaller deals with a wider range of suppliers, more closely managed in-house.
More significantly, most of the major departments are currently in the process of replacing their major ICT contracts – and they have all promised to move away from monolithic deals with systems integrators.
We can expect the picture of who’s winning and who’s losing from government IT to have shifted significantly again by 2016, and beyond.
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