Spending in the federal information technology market will grow from $86 billion in 2010 to $112 billion in 2015, at a compound annual growth rate of 5.4 percent, according to Federal Information Technology Market, 2010-2015, a report from INPUT.
Contrary to other industry groups forecasting negative growth in the government contracting market, INPUT's research shows that while overall spending growth has decreased, the Obama administration's management priorities, coupled with empirical spending trends, strongly suggest that IT spending has some protection from significant reductions.
"Historical spending data shows that the government, which typically receives more funding than requested, continues to invest in IT despite its fiscal circumstances," Principal Analyst John Slye said. "Factoring out the drawdown of census- and stimulus-related spending shown in the FY 2011 IT budget request, we see moderate budget growth."
Federal Information Technology Market, 2010-2015 strengthens the fact that IT budgets are somewhat insulated from major cuts by outlining that initiatives for cost reduction, increased efficiency, and program oversight and performance all depend on IT. In fact, some of the administration's near-term priorities revolve around IT: leveraging shared services, automating processes to improve delivery of citizen services, cybersecurity, and investing in technology infrastructure to reduce energy costs.
"There's no doubt that the administration will continue to push for cost-cutting measures," said Slye. "However, the criticality of IT to government operations and priorities, as well as the gap in federal IT expertise, suggests that IT spending will continue with modest growth."
That gap in federal IT expertise also addresses contractors' concerns regarding insourcing in the federal work force. INPUT analysts predict that the government will face difficulty in growing its work force to a degree required to significantly reduce its reliance on contractors, especially as agencies strive to fulfill more requirements using fewer resources. "Agencies will still need to meet the administration's numerous mandates," said Slye. "They are just going to be required to be more thoughtful and spend smarter."