IT Staffing Report: July 11, 2013

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UK probes competition among IT services providers

Information and communication technology services providers that serve the U.K.’s public sector are coming under a microscope. The U.K. government’s Office of Fair Trading put out a “call for information” on July 3 to check on whether a lack of competition exists.

The OFT reported the software and IT services sector earns approximately £10.4 billion (US$15.80 billion) a year from the public sector in the U.K. And it reported there appears to be a recurring theme of a small number of large IT systems integrators dominating the government market. It reported that Capita is by far the leading supplier of information and communications technology to local government.

In particular, the OFT is seeking information about:

  • The structure of the sector, such as number of suppliers and their market share.
  • Whether there are barriers to entry which make it difficult for smaller businesses to compete in the sector.
  • Whether public sector users face high barriers to switching suppliers, such as costs of transferring and restrictive license agreements.
  • Whether some suppliers seek to limit the interoperability and use of competitor systems with their own.
  • Whether outsourcing of ICT service provision results in a high level of dependence on suppliers’ expertise, undermining the ability of public bodies to drive value for money over time.

“This work demonstrates a continued focus by the OFT on markets related to public services,” OFT Chief Executive Clive Maxwell said in a statement. “Information and communication technology is a crucial part of any modern economy and is key to improving productivity in public services as well as businesses. Given the vital role that this technology plays in the delivery of public services and the cost to the taxpayer, the OFT believes it is important to explore whether there are any restrictions on competition.”

The OFT plans to publish summary findings in October.

For more on the call for information, click here.

In 2012, the House of Commons’ Public Accounts Committee issued a report with concerns entitled “Government and IT – ‘a recipe for rip-offs:’ time for a new approach.”

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