UK councils continue to run into the arms of Capita

Microsoft also makes ground in councils' dash for digital

IT service providers BT, IBM and Mouchel all took a double-digit hit on their share of the local government market over the last year as councils continue to run into the arms of Capita, according to research.

Once again Capita reigned supreme as the primary supplier to councils, increasing its deals by 22 per cent to £658m, found the 2015/16 report by analyst firm TechMarketView.

The amount outstripped its closest rival Serco, which recorded a total deal value of £270m, down four per cent on the previous year.

The report noted that the drop in revenue was most pronounced for suppliers reliant on legacy business, but with little in their pipelines. Meanwhile it said Capita, Fujitsu, Agilisys, Civica and Northgate Public Services grew on the back of "some sizeable" wins.

Microsoft also managed to drum up some new business, beyond its usual income from renewed licence subscriptions. According to the research it made in-roads flogging phones and on Office 365, as councils attempt to push their digital agendas.

That pushed Microsoft up to tenth place in the rankings, having reported £71m in revenue, up three per cent.

Michael Larner, analyst at TechMarketView, said: "Local authorities on the whole are tending to go for small deals and smaller size contracts. Instead of one they are taking a more piecemeal approach.

He said 2016 could be a turning point for the market, as a number of contracts expire: "There is a realisation that the market is at a cross roads," he said.

"The top will stay the same, but there could be a lot of change for the middle-ranked suppliers." ®

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