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Capita to see wave of UK government contracts come to an end by 2025

Technology firms rank second in UK list of strategic public-sector suppliers

Everyone's favorite outsourcing business Capita is scheduled to see 415 government contracts with the British public sector expire between 2022 and 2025, more than any other major supplier.

According to UK government spending research firm Tussell, the IT services company will see government contracts to the value of £700 million come to an end during the next three years.

While it is set to wave goodbye to more contracts than any strategic supplier in any area of the public sector, the value of its expiring contracts is eclipsed by facilities management supplier G4S, which will see 30 contracts worth a total of £1.8bn expire over the period.

The researchers found that in 2020-21, UK government spending on strategic suppliers increased by 24 percent.

"Strategic suppliers" are a small number of companies that do so much business with government that the Cabinet Office takes a more hands-on approach to managing procurement with them. Technology suppliers rank in second place with construction and engineering suppliers, behind the biggest group of suppliers, Outsourcing and Facilities Management, which saw a 59 per cent increase in spending in 2020-21.

There were winners and losers among technology's strategic suppliers. Capita saw spending fall 12 percent to £938 million; BT saw a 22 percent drop in revenue to £463 million; and Fujitsu's share fell to £394 million, down 13 per cent. However, Computacenter – one of Europe's largest resellers – saw its revenue from government increase 79 percent to £572 million; IBM enjoyed a 33 percent bump to £333 million; and Sopra Steria's share of spending hit £179 million, up by 25 per cent.

The report noted that Microsoft and Oracle are significantly underrepresented since Tussel's data only accounts for direct sales to the public sector, and a good portion of the software vendor's revenues comes through indirect sales. The same applies to cloud providers such as AWS.

Consultancies, including those advising on technology strategy and investments, have enjoyed a boom in the last year. Collective spending on these firms reached £1 billion, up 91 percent on a year earlier.

Controversially, consultants were at the heart of the government's response to the COVID-19 pandemic. As of November 2020, the Test and Trace program designed to combat the deadly disease had hired more than 2,300 consultants and contractors working for 73 different suppliers at a total cost of approximately £375m. According to an National Audit Office report published in June 2021, Deloitte expected to bag £298m from the service. ®

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