Slash your profit on tech projects, public sector vendors told

Savings will come out of suppliers margins, warns minster

The government's biggest IT suppliers have been asked to slash the profit they make from public sector projects as the government continues its crusade to slay the UK's monster budget deficit.

As part of the government's deficit reduction programme, the minister for the Cabinet Office Francis Maude has met with the CEOs of the 19 biggest government suppliers - the majority of which are tech providers - to ask them to cut the cost of the services they provide to government.

The group of suppliers that met with the government included Accenture, Atos Origin, BT, Capita, Capgemini, CSC, C&W, Fujitsu, HP, G4S, IBM, Logica, Microsoft, Telereal Trillium, Oracle, Serco, Siemens IS, Steria and Vodafone.

This government said the event marks the start of the process to renegotiate key government contracts to make savings, "a practice already used by many big UK businesses to drive down costs".

It said that the negotiation programme will cover the majority of government's suppliers and will be conducted centrally for the top suppliers and via individual departments for the smaller ones.

The government has called on IT providers to help cut the deficit
(Photo credit: Shutterstock)

The Efficiency and Reform Group, which is based in the Cabinet Office is aiming for achieving £6.2bn of savings from government spending in 2010-11.

Maude, who co-chairs the group said the meeting demonstrates the "importance and urgency" the government is attaching to the efforts to reduce the deficit. He said the challenge to major government suppliers was to see what they can do to take costs out of contracts.

"Some of this will come out of margins but we will also invite ideas on how we can structure things differently to reduce complexity and cost. We will look to put into effect immediate savings and also create plans to further reduce costs in the medium to long term," he said in a statement.