European Government IT Spending Still Resilient

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

IDC has found that spending on IT by Western European governments has been remarkably resilient, with the UK remaining the highest spender in 2010

Despite the downturn, government spending on IT remains remarkably resilient compared to other sectors, with the UK continuing to spend the most money on IT projects in 2010.

So found analyst house IDC, which has published new research examining IT spending and market-sizing forecast for the Western Europe government sector for 2008–2013.

“Total government spending for hardware, software, and IT services in Western Europe will increase from $56.6 billion (£35.7bn) in 2008 to $68.5 billion (£43.2bn) in 2013,” said Jan A. Duffy, research director of European Government Technology Decision Support, IDC Government Insights EMEA.

“IT suppliers who want to capture a share of that growth must take pains to ensure that their service offerings address the need for modern infrastructures and application capabilities, streamlined processes, and a demonstration of cost containment or, even better, cost reduction,” Duffy added.

IDC found that despite the recession placing strain on government’s finances because they have had to increase spending on social sectors, whilst dealing with decreases in tax revenues, “Spending on IT remains relatively stable at this point.”

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The IDC research also highlighted the political nature of IT spending in the UK. This comes after an investigation by the Independent newspaper, which found that under Labour, the British taxpayer has been left saddled with a bill of more than £26 billion for computer systems that have either suffered severe delays, or run over budget, or that have been cancelled altogether.

IDC feels that the pressure to right size government and its spending could result in increased interest in IT as a way to compensate for fewer staff.

“Although there could be a shift in how money is being spent and growth may be relatively slow, we are unlikely to see a significant slowdown in IT spending in the next few years,” said IDC.

The IDC government research study also predicts that the effects of the economic downturn will continue through 2010 in Western Europe, but will ease as the impact of fiscal and monetary stimulus packages becomes more evident.

Despite the recessionary trends, IDC expects government sector IT spending to remain resilient through the forecast period, achieving a 3.9 percent CAGR (compound annual growth rate) and reaching $58.6 billion (£37bn) in 2010.

And IDC feels that the IT services will continue to increase its share of IT government spending. It predicts that public administration and other compulsory activities (tax systems etc) represent the largest IT spending by central government.

IDC also says that among the top five economies in Western Europe, the UK is the highest spender in 2010. As a group, the Big 5 Western European economies will represent some $36.8 billion (£23.2bn) in IT spending in 2010.

The UK is the highest spender, Germany is next, followed by France, Italy, and then Spain.