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LOCAL GOVERNMENT OUTSOURCING SHOWS NO SIGN OF SLOWING (CORRECTED FIGURES)

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The local government IT outsourcing market is up 6 per cent to£132m while business process outsourcing is up a rec...
The local government IT outsourcing market is up 6 per cent to£132m while business process outsourcing is up a record 40 per cent and worth£14m annually says research published today by ITNET.

The sixth annual ITNET Index shows that 26 business process outsourcing contracts were signed in 1999 against 22 in 1998. The total value of contracts was up£2m to£42m, but the average contract value was down£200,000 to£1.6m.

Of the 26 contracts, 18 were new contracts with 14 authorities outsourcing for the first time. Of the six renewals, three contracts changed hands.

Business process outsourcing was up an unprecedented 40 per cent in 1999 again showing the strongest growth especially in outsourcing revenues and benefits.

'One in five authorities have now outsourced IT services and all these can not be wrong,' says ITNET's sales and marketing director Paul Johnson. 'Outsourcing is here to stay. The market is not only outsourcing central IT, but all aspects of information management.' Johnson says that future contracts are more likely to be large value, long-term deals. 'Ten year contracts will be commonplace.'

The Index shows that in IT outsourcing, there were 15 contracts agreed in 1999 of which seven were new contracts worth£35m a year in total. Six authorities outsourced for the first time.

The average value of contracts let was£2.3m, a 64% increase on the 1998 figure of£1.4m. The London boroughs let four contracts worth£12.4m.

The ITNET Index shows the total IT outsourcing market in the UK was up 22% to£5.6bn in 1999. Outsourcing now accounts for 25% of all external spend on software and computer services.

The ITNET Index is the most comprehensive source of information on the IT outsourcing market in the UK and now tracks 796 live contracts.

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