Specialised tech suppliers have significantly expanded their sales to government throughout the pandemic, with around eight in 10 of the 200 fastest growing technology companies in the sector being small and medium-sized enterprises (SME), according to data from public sector market intelligence platform Tussell.
Published 9 December 2021, Tussell’s inaugural Tech200 list was created in partnership with trade association TechUK, and charts the suppliers that have seen the biggest growth in earnings from the public sector between the 2019-20 and 2020-21 financial years.
Out of all 200 fastest growing firms, more than three-quarters were SMEs (defined as any company with fewer than 250 employees and less than £50m in turnover), including nine of the top 10.
On average, each firm listed grew by £3.64m, or the equivalent of 345%, with a combined total growth of £728m across all companies.
While the list of fastest growing suppliers was dominated by SMEs, the total sales to the public sector of the top 200 (£936m) was still only 15.5% of the sales made by the 25 biggest tech suppliers (£6.05bn).
By contrast, the positions of the 25 leading tech suppliers for both 2020 and 2021 fiscal years were largely unchanged in terms of how much they earned through public sector contracts. For example, in the 2020 fiscal year, Capita earned £865m, but remained on top in 2021 despite earning £773m, or roughly 11% less.
Similarly, Atos remained in second place, earning £585m, an increase on the £564m it earned the previous fiscal year, while Capgemini moved from fourth in 2020, when it earned £422m, to third in 2021, when it earned £445m. Many of the other leading suppliers earnings remained similarly stable.
In terms of overall change among the top tech suppliers, the average was a 6% reduction in earnings between fiscal years.
“The list is intended to be a purely fact-based, unbiased analysis of the fastest growing tech firms – completely uninfluenced by any sponsors or the interests of individual companies or organisations,” said Tussell in a blog post.
“We want to use the data to tell the stories of what’s happening in public sector tech, and run the list annually to highlight the most interesting up-and-coming firms.”
It added that while the largest IT firms are still clearly dominant in the public sector, the tech market stands out from other markets because of its ecosystem: “It’s not simply a case of a dozen major Tier 1 suppliers and their subcontractors, which you may see more commonly in construction or FM markets.
“The list makes it clear that there is a thriving, emerging role for experts, advisers and resellers who help knit together the complex network of technologies and solutions, and as such create a kind of ‘ecosystem’, rather than a traditional hierarchical market that you see in many other industries.”
Breakdown of the list
While only five education technology firms were listed in the top 200 – including ParentPay, School of Code and Egov Solutions – school data management firm Wonde was the absolute fastest growing tech company in the public sector, with government spend rising 3917% from £358,831 to £14,415,227 in just a year.
IT services supplier Jigsaw Systems was a close runner up with a 3676% increase in government spend, and is the only company in the top 10 which is not an SME.
All of the public sector spending on Wonde during the period came from local authorities, rather than the Department of Education (DfE), while spending on Jigsaw came from a combination of councils and central government departments; with the Department of Health and Social Care (DHSC) having the highest invoice value by a significant margin at £14.5m.
Following Wonde and Jigsaw with the fastest growth is digital technology and innovation provider Hypertalent Solutions, at 2032%; consultancy TPG Services, at 1998%; systems integrator Diegesis Limited, at 1332%; and telecoms firm Firetext Communications, at 1211%.
All of the contracts won by Hypertalent, TPG and Diegesis were awarded by central government bodies, with the Cabinet Office, Ministry of Defence (MoD) and Office for National Statistics (ONS) spending the most on each supplier respectively during the past financial year.
In that same period, however, the biggest spender with the 200 fastest growing tech firms was the DfE, which spent £270m of the £936m total. The next highest government spenders were HM Revenues and Customs (£48.3mn) and the Department for Work and Pensions (£44.6m).
Although it is not an out-and-out edtech company, a significant portion of the DfEs spend (£266m) went to hardware firm Computacenter PLC for the provision of laptops, tablets and routers for disadvantaged children and young people to help with remote education.
In terms of subsectors with the fastest growth, one in five firms are either involved in consultancy or digital transformation work in the public sector, while roughly 17% are providing either software or cloud solutions respectively.
Education and health were, inevitably, the two sectors most affected by the pandemic and the figures show the extent to which they turned to technology to help them through the crisis.
On top of the increased edtech spend, the list also highlighted a surge in government spending with healthcare technology companies, of which there are around 30 listed. For example, while the DHSC spent £1.29m with the 200 firms in 2019-20, it spent £23.4m in the most recent financial year.
Although no healthtech firms reached the top 10, virtual outpatient services provider Medefer Limited had the fastest growth in the subsector, with a 580% increase in government spend on the past financial year.
Despite fewer than 10 companies on the list being solely focused on developing artificial intelligence (AI), including Faculty Science (503% growth) and Databricks UK (408% growth), it can be difficult to quantify how many are deploying AI, as the technology can be used across a range of services and might not be specified at the point the contract is awarded.