The IT sector is facing a new wave of cuts as the government seeks to save billions by cutting public sector spending.
The government says it is going to cut its overall spending by up to a third by 2019, from $7.5 billion to $6.5bn.
The cuts will be passed onto the private sector, which has already begun to lay off staff, and it is likely to hit the IT sector hardest, according to industry analysts.
However, a new report suggests that the impact will be more muted than anticipated.
The Institute for Government and Public Policy’s IT Strategy Project found that a large part of the savings will be in the form of the creation of more and better IT services, which would make IT more accessible and efficient.
It also found that while the government has cut its IT expenditure, private sector organisations are expected to pay more into the system.
However there are some areas where the government is expected to be saving money.
The report says that the government will be able to create jobs by using new technologies, while private sector employers will also see an improvement in efficiency, with IT teams able to use the new technologies to get the job done quicker.
In the private sectors, the government can also boost productivity by making use of technology like cloud-based applications, by building better IT infrastructure and by using more cloud- and cloud-ready software.
But the report says it will not be possible to achieve this without substantial government funding.
« This could be achieved through a new IT strategy that sets out the government’s plans for improving IT, » said Peter Hargreaves, the institute’s director of research and analysis.
« If the government doesn’t have the funding, it will be very hard to make the changes. »
He added that the report did not say how much money would be available to the private firms in the sector.
A report released on Tuesday by the Confederation of British Industry said that in 2019-20, the IT industry was expected to save $5.9bn in direct and indirect spending, $4.7bn in the value added sector and $2.8bn in business services and professional services.
It said that private sector firms were also expected to create 1.2 million jobs in the private and public sectors.
« The UK has the largest private sector employment in the world, and a number of sectors will be hit hardest by these cuts, but many other industries are expected as well, » the report said.
The Government is also expected « to benefit from a reduction in costs from government IT programmes » as a result of the cuts.
« In particular, this would help to reduce the costs of IT, which in turn will benefit businesses and increase productivity, » the analysis said.