IT leaders voice their hopes and fears for tomorrow's Budget

Chancellor George Osborne must show he understands IT's pivotal role in the economy

With more austerity measures expected in tomorrow's Budget, the outsourcing industry is predicting a surge in interest from cash-strapped organisations.

Tight budgets across local and central government have already seen IT departments increasing their reliance on outsourcing providers.

However, the National Outsourcing Association (NOA) believes there are measures the government could take to improve the outsourcing process, particularly with regard to multisourcing - an area likely to see growth as a result of measures to encourage procurement from smaller companies.

NOA chairman Martyn Hart argued that many in the public sector would need help with negotiating multisourcing contracts.

"Very few workers in the public sector will have experience of how to manage a number of different suppliers effectively, so perhaps we'll see the Chancellor setting aside some of the Budget towards training public sector workers in this respect?

"They might even feel that it would a good idea to expand this investment in training so that it includes smaller enterprises who have no real experience in dealing with contracts," he said.

NOA would also like to see the Chancellor encourage smaller firms to bid for work by making the bidding process itself tax deductible.

Finally, the association said it would welcome the introduction of a kitemarking scheme to help organisations to assess the performance of outsourcing suppliers.

Meanwhile, a survey released today by IT trade body Intellect shows that 75 per cent of companies fear the government does not understand how the IT sector can help deliver innovation and growth across the whole economy, and hope it will present a more strategic vision for growth in tomorrow's Budget.

Technology companies in particular are pinning their hopes on economic expansion, with more than 90 per cent saying increasing sales is their top priority, followed by accessing new markets and developing new products. Only 17 per cent said reducing costs is a top priority.

John Higgins, Intellect's director general, said: "The technology sector is prepared for growth but is concerned that the government fails to understand the huge role technology can play in delivering the whole UK growth strategy.

"The IT and telecoms sector employs more than 1.5 million people in the UK and employment is forecast to grow at 2.1 per cent per annum, nearly five times the UK average, over the next five years. Our view is that the government has to do better in two areas: support for world-class technology development and incentives for technology investment if the economy is to break through into growth."

As far as the public sector goes, some in the industry believe continued pressure on budgets could bring benefits in the form of more innovation and improved efficiency.

"For some years, public sector IT budgets have either remained steady or increased," said Jeff Parris, vice president of business development at IT services provider Global Crossing. "While some departments have grasped the nettle and implemented efficiencies of their own accord, this lack of pressure on spending has meant there has been little incentive to change or review the status quo.

"As a result, innovation and efficiency, especially across non-reforming departments, has suffered and we're now witness to a situation where server utilisation is just 10 per cent, while the siloed nature of buying services has resulted in numerous communications channels overlaying each other, serving the same people."

Parris said he would like to see more government investment in rural broadband and the Public Service Network.

"Any available money should be directed towards increasing broadband provision beyond the metropolitan areas to facilitate the Prime Minister's Big Society drive designed to allow businesses and individuals to take control.

"The government must also continue its deployment of the Public Sector Network - a ubiquitous networking platform for the civil service that has the potential to deliver more than £1.2bn in savings over the next couple of years."

IT analyst firm Gartner argues that the 19 per cent cut in government spending outlined in last year's Comprehensive Spending Review will require radical choices such as the initiation of government-wide IT consolidation and crowdsourcing. It might also require that channels of communication to citizens such as call centres or web sites are shut down. Perhaps there will some announcements to this effect tomorrow.