UK Tax Authority Allocates £657M for Low-Code Development

UK tax and customs authority HMRC has ordered three contracts for low-code development platforms, valued at up to £657 million (approximately 125 billion yen). The move aims to address deep-seated problems in legacy systems using low-code technology, but the contract value shatters the common perception that “low-code equals low cost.”

Three Companies Share £650M Contract

According to reporting by Lindsay Clark of The Register, HMRC announced the award results for the low-code procurement in August 2026. The procurement was conducted through the DALAS (Digital and Legacy Application Services) framework, with work split among three companies.

The largest contract, worth £360 million (Lot 1), went to Cognizant. The company will be responsible for the “design, development, testing, deployment, operation, and continuous improvement” of the low-code technology estate. Its core services will include building, configuring, DevOps, and operational service management for low-code products.

Indian IT services firm Coforge secured £219 million (Lot 2) to provide services equivalent to Cognizant. French major consulting firm Atos won £78.2 million (Lot 3) and will handle “program management, supplier management, governance, assurance, and deployment support” for the low-code technology estate.

All three contracts have an initial period of three years, with two one-year extension options.

DALAS Framework Worth £4.5 Billion

This procurement is part of the second phase of the DALAS framework. While Lot 4a (multi-product configuration section) was initially estimated at £700 million, the total estimated value for the entire second phase, including Lots 1, 4a, and 4b, has been raised to £2.8 billion. The overall maximum value of the DALAS framework reaches £4.5 billion.

Low-code technologies covered under Lot 4a include Pega, ServiceNow, Microsoft Dynamics, and Power Platform. This comprehensively covers major low-code and low-code-adjacent platforms.

Structural Problems of Legacy Systems

HMRC’s move to invest heavily in low-code stems from long-standing legacy system issues. The UK’s National Audit Office (NAO) noted in a 2025 report: “Fixing legacy systems is taking longer and costing more than HMRC anticipated. HMRC operates one of the UK’s largest and most complex IT environments, and modernizing its IT infrastructure to keep pace with technological evolution is a major challenge.”

HMRC collects annual tax revenue of £938.8 billion. The scale of the contract value reflects the sheer size and complexity of the IT infrastructure for the organization responsible for the UK’s revenue.

Dispelling the “Low Cost” Myth

This case challenges the industry’s perception of low-code development costs. Low-code technology has traditionally been positioned as a means to reduce engineering resources and lower development costs. However, HMRC’s example shows that significant costs are incurred for the governance, management, and control systems that form the premise for implementation.

Notably, £78.2 million is allocated not to the “build” of the low-code technology, but to “leadership services.” This underscores that decision-making, quality assurance, and supplier management in low-code implementation are as important, if not more so, than the technology itself.

Questioning the Cost Structure of Low-Code

Editorial Opinion

Short-Term Impact: This HMRC procurement signals that UK government agencies are fully committing to investment in low-code technology. With the DALAS framework expanded to a scale of £4.5 billion, this major public sector low-code project will prompt other companies wishing to enter the framework and competing technology vendors to reassess their market entry strategies. Over the next 3 to 6 months, price negotiations and customization service markets for low-code infrastructure technologies like Pega and ServiceNow targeting the UK public sector are likely to become more active. Long-Term Perspective: Over a 1 to 3-year span, industry debate on the true cost structure of low-code technology is expected to deepen. Large-scale public sector low-code implementation requires greater costs for governance, operations, and supplier management than for the technology itself. This insight suggests similar issues could arise in large-scale low-code adoption by private enterprises. There is a need to re-examine the validity of the notion that “modernization can be done cheaply with low-code” in the context of legacy system migration projects.

References

• “UK taxman discovers low code doesn’t mean low cost with £657M awards”, by Lindsay Clark — The Register, 2026-08-19T08:44:00.000Z (ARR)
• Source URL: https://www.theregister.com/public-sector/2026/08/19/uk-taxman-discovers-low-code-doesnt-mean-low-cost-with-657m-awards/5288634