A potential government decision to renegotiate major IT contracts would have a significant impact on IT contractors, it has been claimed.

Thirty-five major government IT outsourcing contracts could face renegotiation within the next few years, options which will surely be taken during this period of austerity, according to technology analyst Ovum.

With this in mind, the head of marketing at the National Computing Centre Michael Dean says that the knock-on effect for the outsourcing industry - and therefore the IT contractors it serves - could be significant.

"If the government takes a hardline approach through either non-renewal or renegotiation outsourcers will be forced to find alternative revenue streams in a market which, according to recent reports, is in decline," he explained.

However, Mr Dean points out that contracts are a "two-way street" and any renegotiation which does not suit the contractor can be challenged legally, possibly resulting in a delay or a penalty due to the outsourcer.