Mid-sized companies are starting to outperform the leading IT suppliers to government, according to a report by analysts from TechMarketView.
Indian IT firms such as TCS and HCL saw their public sector revenues grow by 24 percent and 22 percent respectively last year, while mid-sized providers Computacenter and Dell reported public sector revenues up by seven and eight percent each.
Smaller software providers such as Advanced Computer Software (up 25 percent), Allocate (up 15 percent) and UNIT4 (up four percent) all reported strong growth in the public sector too.
While revenues to the UK public sector IT market as a whole fell by 0.3 percent, the top 20 suppliers’ revenues in this sector fell by 2 percent.
TechMarketView said that these statistics prove show that “middle-ranking players just outside the top 20 are outperforming the leading suppliers”.
Despite this overall decline, the report found that Capita beat the trend with an 11 percent rise in sector revenue to £1.6 billion, making it the biggest IT provider to the UK public sector.
The firm beat HP which was ranked second due to a 10 percent decrease in public sector IT revenue to £1.5 billion.
Capgemini earned £1 billion from the UK public sector IT market followed by Fujitsu which took £889 milion last year. BT, IBM, Atos, Serco, Microsoft, CGI, Steria and Oracle were next in the rankings, in declining order by revenue.
Capita’s success is partly down to its focus on local government over Whitehall and the fact that it primarily provides business process outsourcing as opposed to ICT, which is subject to stricter Cabinet Office controls, the report said.
It also has major local government contracts in Birmingham, Barnet and West Sussex, although Birmingham City Council recently took elements of its outsourced service back in house and the contract with Barnet was challenged in court last year.
HP has suffered as a result of its reliance on central government for 93 percent of its public sector revenues. It is the IT supplier most impacted by the Cabinet Office’s policy of breaking major legacy IT outsourcing contracts into smaller contracts with a range of providers, the report said.
Of the top 20 companies, 12 reported declines in their revenues for the last financial year, averaging at a drop of two percent. Aside from HP, the firms that experienced the sharpest declines were RM (8 percent), CGI (7 percent), Capgemini and Steria (6 percent each).
Suppliers who have managed to increase their public sector IT revenue include Atos (4 percent), Serco (1 percent), Microsoft (1 percent), Lockheed Martin (4 percent) and Northgate (7 percent).
The list also includes a new entrant – Agilisys- which earned £136 million from the public sector last year. Notable deals include a £5.7 million contract with the Legal Aid Agency and an agreement in partnership with BT to provide ICT services to the London tri-borough authorities.