The government’s public sector spending cuts will affect everybody including IT contractors and suppliers.
Francis Maude, the government chief cost enforcer, met with the chief executives of the government’s biggest service suppliers last week to discuss how they can cut 20% from the cost of their services. As well as challenging suppliers to reduce costs, he also invited suppliers to submit ideas on how things could be structured differently in order to cut their costs in half and reduce complexity.
John Suffolk, the coalition’s CIO was also present at the meeting. As well as focusing on contract renegotiations and project reviews, he will enforce the ICT moratorium on all spending on IT above £1m.
Management consultants believe that the only way to half costs would be by moving most service functions offshore but this would be politically explosive.
Key government IT contracts will all need to be renegotiated as well as those of the majority of government suppliers such as BT, Fujitsu, HP and IBM. It is thought that the government will not actually cancel any contracts, rather curtail the existing ones.
Maude said that the coalition was committed to reducing the deficit and this meeting demonstrated the urgency attached to the problem. The government currently spends approximately £80bn on services and £140bn on goods procured from the private sector.
The efficiency drive will also include sharing back-office services and standardising telephony and IT structures throughout government departments.
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: 329/365 – empty house. by B Rosen
