The coalition government crackdown on IT spending in the public sector could result in more jobs for contractors in government departments. This is the view of Sean Young director of Spring Technology who predicts that new budgeting models will see a rise in contracts of between three and six months. These will be required in order to keep ICT projects underway and the machinery of government moving.
by Helen Beckett [Published 16/07/2010]
"The public sector will hire a lot more contractors. They will deliver on skills requirements by cutting down on permanent staff and hiring contractors. The length of these contracts will not necessarily be a reflection of the need for skills but more a requirement of government budgeting", says Young.
"The current projects will be ongoing”, agrees David Bloxham, managing director of GCS. He believes that ICT capacity will have to maintained in order to service this need but that provision will be shifted from in-house to the large third party suppliers such as Capita and Northgate.
Meanwhile, the Con-Dem government is poring over ways of reducing the cost of ICT in public sector and has invited suggestions from the supplier community.
At a meeting this week between ICT suppliers, the paymaster general, Francis Maude, reportedly told attendees that the government wants 20% cost reductions. Furthermore, suppliers would be expected to deliver 40% savings over three years, according to Computer Weekly.
While the coalition government expects suppliers to reduce their profit margins, it is also open to ideas about how the government should change its procurement and consumption of IT services. Charles Hughes, partner with management consultant AT Kearney, says that these would most likely be delivered through three different procurement models.
Outcomes based
Outcomes are defined in advance and then as each phase is released, the supplier is paid. This model has been implemented successfully by the MOS for some time.
Risk share
The cost of actual delivery is known by both parties but some of the value is wrapped up in the delivery of benefits. The more benefits that are delivered, the greater the fee paid to the supplier. In this way n element of risk is shifted to the supplier.
Results-related
This is similar to the ‘no win no fee’ charged by legal firms – and in the delivery of highly complex software, the requirements analysis would have to be nailed down.
Whichever model is adopted, as Hughes explains, "Procurers have to be able to handle different models, which are more complicated and require maturity. The days of good old time and materials or rate-card based contracts are no longer acceptable to anyone."
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