Government IT Budgets to be squeezed

Posted by Kevin Brady on Sat 2nd January 2010 at 11:16 PM, Filed in Industry News

For those IT professionals and contractors working for the public sector life is going to get tough in the coming months.

The word on the street is that Local Government and Whitehall are going to make cuts in IT of between 10% and 40% in the 2010/11 financial year. It’s not a case of will cuts be made, but how much and when. The problem for any incoming government is that £180 billion borrowing requirement is not sustainable. An incoming government will either make the cuts under its own steam or the International Monetary Fund will make the decisions for them.

The pre-budget report made vague mentions of IT savings, with very little detail on how or where they would be implemented. However, we had a little more transparency (something this government is not known for) provided through the Operational Efficiency Programme, which identified £7.2 billion of savings from back-office and IT operations. However, these figures fail to recognise that cuts in operational areas will also have knock-on effects. For example local authority business unit’s may loose the desire or ability to commission new IT initiatives when central government is pulling in the reins.

So if you’re an IT Professional or a contractor working for the Public Sector, income streams in 2010 look under threat. However, as mentioned in Recessions Sometimes Have Silver Linings there can also opportunities for the IT industry. This drive to save IT costs can be an opportunity for IT managers with the innovative spirit to look for new ways of doing things which in turn will drive demand for new IT technologies and capabilities.

For example private sector IT directors adopted a “spend and save” approach, using savings over and above those budgeted to find new projects. It is no surprise that technologies such as visualization have taken off during the recession, as server and storage consolidation cuts costs and increases efficiency.

Cuts are coming and the pressure will be on for public sector IT managers to think creatively about their IT budgets and how to do more with less.  Let’s hope they adopt the “spend and save” approach in the coming year.


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