Warning: Tough times ahead

It'll take maturity to survive the coming budget crunch

• By Nick Wakeman
• Jul 01, 2010

During the past 20 years, the government market has grown from a precocious teen full of potential to a strapping young adult to where it is today — a mature individual hitting its prime.

The market now has a stable number of publicly traded companies and pipeline of companies that are preparing to go public. To me, that means there is a community of investors who understand and believe in the government services market. Many of those investors, particularly the private equity groups, have taken multiple stakes in the market.

I remember all too well the days when the government services market was a pariah on Wall Street.

But the growth of the past decade changed all that, as the charts accompanying our cover story illustrate.

However, the companies in the government services market will face some of their greatest challenges during the next several years as their customers try to get control of the federal deficit. That will mean no growth for some companies and perhaps a decline for others.

Yes, there will be growth in sectors such as intelligence and cybersecurity. But the pressure is on for companies to be smart and pick markets, capabilities and customers carefully.

If you listen to the talk from the Obama administration, the information technology industry finally has reached the place its leaders have long wanted to be: at the center of government operations.

In flush times, it is an easy place to be. But it’ll take maturity to survive the tight times ahead.

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