UK tech procurement is moving in the wrong direction

Stephen Kelly, CEO, Cirata

UK technology spend is increasing. But the structure of that spend is becoming more concentrated, not more diverse.

Consider the following:

Public sector technology spend is now close to £20bn annually: UKAuthority
At the same time, a relatively small group of suppliers continues to dominate that market: Tussel

The share of UK-based suppliers has declined slightly, despite overall growth.

In cloud infrastructure, concentration is even clearer. Amazon Web Services and Microsoft each hold roughly 30 to 40 percent of the UK market: TechRadar

The UK competition regulator has already raised concerns that competition is not functioning effectively in this space. Switching providers remains limited. Over time, that creates structural lock-in.

There are real consequences.

An AWS outage exposed the UK government’s £1.7bn reliance on a single provider: The Guardian

At the same time, areas that are strategically important, such as AI, still represent a very small proportion of procurement activity. Public sector AI contracts account for around 2.5 percent of total IT spend: Digit

So while overall spending is rising, strategic capability is not necessarily being built domestically.

There are clear examples in both directions.

Kainos is an example that shows that UK firms can deliver at scale when given access to major programmes.
UKCloud shows what happens when domestic providers cannot compete for contracts in their home market.

The issue is not capability. It is procurement behaviour.

The result is a simple imbalance. UK companies scale internationally. UK institutions procure internationally. If that continues, the UK will remain dependent on external providers in areas that are increasingly critical.

A practical step would be to set a clear ambition. 30 percent of IT procurement directed towards UK technology companies in areas such as data, AI and cloud. Not as a quota. As a signal.

Procurement decisions shape markets. At the moment, those decisions are not aligned with long-term economic resilience.

– Stephen Kelly, CEO, Cirata

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