Report: State and local market will bounce back

State and local government spending on information technology products and services will make a strong recovery over the next five years, according to a report from market research firm Input Inc. of Reston, Va.

The state and local IT market is expected to grow at a compound annual rate of 8 percent, from $46 billion in 2004 to more than $64 million in fiscal 2009, according to the Input report (executive summary link).

"The state and local IT market has weathered a difficult period over the past few years," said James Krouse, Input's manager of state and local IT market analysis.

"Sustained economic growth, forced changes in state and local tax structures and an aging government work force will help push the recovery of the state and local IT market."

The recovery will begin modestly in fiscal 2004 and 2005, in line with economic expansion, and will accelerate as governments replenish rainy-day funds and expand the use of alternate funding methods for technology initiatives, Input said.

Input's forecast identifies professional services outsourcing, communications and networks, and software as the segments with the highest growth rates in state and local spending. Conversely, spending in traditional areas such as hardware and maintenance of legacy systems will remain relatively flat or decrease over the next five years.