Some of the IT market’s foremost vendors have seen a marked increase in revenue derived directly from public buyers, while consultancies have gained sales from a rise in AI engagements
While the overall procurement sector showed signs of opening up in the 2024/25 year, some of the world’s biggest technology companies grew their public-sector sales, a major annual report from Tussell has revealed.
The public procurement analyst firm has today published the latest version of its UK Strategic Suppliers Report. The yearly review provides an insight into trends in the relationship between the public sector and the 39 outfits featured on government’s strategic supplier list – which contains Whitehall’s biggest or most important suppliers, with whom relationships are managed on a government-wide basis by a named ‘Crown representative’. Included on this roster are 13 tech firms – such as AWS, Microsoft, IBM and Oracle – as well as three telecoms providers, and four major consultancies.
The Tussell report finds that these 39 companies collectively accounted for 10% of public sector procurement revenue in FY25 – marginally down on last year. The overall tally of money spent with the companies also dropped by £1bn to £24.7bn – despite the overall market expanding by 2%.
There was also a small decline – of 2% – in the cumulative worth of deals awarded to the cohort of strategic technology suppliers.
But, while the study says that this points to a diversification of the landscape and more opportunities for smaller players, there are also signs of some of those tech giants increasing their strength.
By far the biggest slice of central government’s spend with the strategic suppliers – 43% of the overall total – is accounted for by the 13 technology companies on the list.
The Tussell study further finds that Whitehall’s top providers won 26 contracts related to AI – a figure which has more than doubled in the past five years.
Capgemini won more of these than any other supplier in FY25, while Microsoft and Oracle both saw hefty growth – of 30% and 47%, respectively – in revenue attributed to direct contracts with public bodies. These deals are distinct from those covering the provision of a manufacturer’s products – but awarded via its channel of specialist reseller partners.
There was even a 1% increase in public sector sales for Fujitsu in 2024/25 – despite the ongoing fallout of the Horizon scandal, which has prompted a number of politicians and other public figures to call for a moratorium on deals being awarded to the firm. The Japanese-headquartered IT provider posted public-sector revenues of £453m during the year.
Tussell founder Gus Tugendhat claimed that shifting trends in government’s relationship with its biggest commercial partners can provide pointers to its wider objectives.
“The state faces two massive conflicting pressures: investing more in underfunded public services, while cutting an unsustainable fiscal deficit,” he said. “In this context, effective scrutiny of public procurement matters more than ever. This report looks at spend with the strategic suppliers to see what it tells us about government priorities more broadly.”
