Skip to main content

Some sectors fare better than others in Federal ICT market slowdown

by Staff Writers •
Subscriber preview

While there’s been a significant slowdown in the Federal Government ICT market, Intermedium research shows the rate of slowdown varies across ICT product/service categories.

Last week in the medium, we pointed out there had been significant variation between agencies in the impact of the slowdown.

Intermedium’s preliminary analysis of AusTender data for the 2007-08 financial year shows IT Services remains the largest category of spending, but the preliminary data suggests spending in this category was cut by more than $300m. This category includes the sub-categories of Managed Services, SI Services, Labour Hire, Software and Hardware Support, Training and Business Consulting.

After more than doubling in size in 2006-07, spending on software dropped dramatically in 2007-08, largely reflecting the project run-downs at Centrelink, DIAC and Customs.

The most significant decline was in Hardware spending. The Hardware sector lost 50% of its value in 2006-07, and this decline continued in 2007-08. However, it should be noted that a large amount of ICT hardware spending takes place under infrastructure outsourcing agreements. Intermedium’s data only reflects this segmentation where it is clear from the contract description.

As explained in earlier editions of the medium, the current downturn in ICT spending by the Federal Government does not reflect the economic downturn, but rather the coincidence of three cycles that uniquely affect the public sector: the change in Government (the political cycle); the first year after an election (the electoral cycle); and seasonal spending patterns (the budget cycle). Intermedium expects ICT spending to pick up as we move into the second year of the electoral cycle and the various reviews conclude. The recently released Gershon Report will also impact the market, with an aggressive implementation schedule proposed. The Government’s response to the global credit crisis can also be expected to bring forward program expenditure in a number of key areas, with an associated increase in ICT processing and support.

Already a subscriber? Sign in here to keep reading

Want more content like this? Contact our team today for subscription options!

  • Stay up-to-date on hot topics in government
  • Navigate your business with executive level horizon outlooks
  • Get deep public sector ICT insights on our Market Watch series
Jurisdiction
  • Federal
Sector
  • Policy
Tags
  • AusTender
  • Federal Government ICT
  • Gershon
  • Hardware spending
  • Market Slowdown