VARs to gain as public sector deals downsize

Decline of mega-contracts could provide an advantage to smaller resellers

Resellers could cash in on the lucrative UK public sector software and IT services (S/ITS) market as emphasis is placed on mid-sized deals more suited to smaller providers, according to analyst firm Ovum.
Georgina O’Toole, lead analyst at Ovum, said: “There have been some major infrastructure contracts or mega-deals during the growth of the S/ITS market. But once these contracts are in place the government will take advantage of there being more players in the market.
“With the added interest of second-tier suppliers, the government will have a wider range of resellers to choose from in the market and not just the bigger tier-one companies.”
Ovum has predicted a growth rate of 6.9 per cent between 2007 and 2011 for the S/ITS market, with the market worth just over £11.7bn by 2011. The UK public sector S/ITS market grew by just under nine per cent in 2006, worth a total of £8.1bn.
However, the analyst expects a significant slowdown in growth from 2008 to 2011 as many of the major IT projects slow and public sector departments and suppliers start feeling the impact of budget constraints.
Robert May, managing director of VAR Ramsac, said: “This is the normal market cycle. Bigger projects are coming to an end, thus opening the market for smaller resellers.”
Shaune Parsons, managing director of public sector VAR Computer World Wales, said: “It may be possible for more mid-tier resellers to enter the S/ITS market. But there are so many government framework contracts that a smaller firm may find it harder.”
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