Report: Traditional IT work is shrinking

There's good news and bad news ahead in the government market.

The good news is that the overall pool of funds available to contractors is getting larger, according to a report by the new market research firm Government Futures.

But the bad news is that the portion of spending that IT contractors traditionally chase ? infrastructure and application supporrt ? will shrink by 10 percent to 25 percent by 2010.

Government Futures, which launched this week, based its prediction on a survey of more than 130 government and industry officials.

As traditional IT spending goes down, the government will spend more on mission support services, said Bruce McConnell, president of Government Futures.

Spending on things such as human resources, financial management and logistics services will grow at a double digit pace, he said.

But attaching a specific dollar amount to that spending is difficult, because the spending embedded in agency operations budgets and are not broken out as clearly as IT spending, McConnell said.

To take advantage of this shift in spending, contractors need to be subject matter experts so they have a firm grip on their customer's missions and how their services can help agencies fulfill their missions, McConnell said.

Contractors also need to build trusted relationships so agencies will turn to them with work that is at the core of the agency mission, he said.

"We are headed into a new world," McConnell said.