Report sees growth ahead for federal IT services contracts

IT services contracts could nearly double by 2015, report forecasts

While budgets are tightening across the federal government, the outlook for information technology service contractors serving federal agencies is surprisingly upbeat ; moreover,  the segment is likely to grow during the next four years, according to a new report today.

Demand for federal IT contracting services is expected to increase from $38 billion in 2010 to $52 billion in 2015, according to the report from Input Inc. market research firm in Reston, Va.

Key drivers of the upward trend are increased demands for efficient and energy-saving technologies, for transparency and open communication, and for innovation, wrote John Slye, Input principal analyst.

“What we are seeing is a fairly minimal short-term impact in the IT services contracting sphere relative to other areas of contracting,” Slye said. “Due to contemporary demands, including data center consolidation, enhancements in cybersecurity and national trends toward cloud computing, the IT service industry will be equipped to bear the force of federal cuts better than others.”

Slye also noted ongoing growth in IT services contracting related to the Federal Data Center Consolidation Initiative by federal CIO Vivek Kundra. The program aims to decrease waste at underperforming agencies and re-allocate the savings to priority mission departments supported by IT.

“The ensuing reduction will become a huge propellant for the IT marketplace, requiring an increase in the need for systems operations upgrades in addition to consulting services,” Slye wrote.

The report said IT services will be needed to manage growth in cybersecurity, business intelligence, process automation, data proliferation, and mobility and service-oriented architectures.

Although President Barack Obama’s anticipated fiscal 2012 budget request reportedly calls for a 10 percent reduction in professional and technical services, Slye noted that those reductions are likely to be in non-IT-related areas, such as cost benefit analysis, policy review, program evaluation and management services.

Although IT service is projected to grow overall, there is a risk of negative impacts along the way that could reduce the forecast, the INPUT report added.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

Reader Comments

Mon, Mar 7, 2011 Managed Hosting http://www.lightcrest.com/

Alot of money could be saved if people had more freedom to chose their vendors.

Wed, Feb 16, 2011 pb

Delia wrote: "...millions of dollars that are supposed to be set aside for small businesses..." Tell me about it. I applied for a SBA loan and, after over 3 months a mountains of paperwork (over 60 pages, including my business plan, and myriads of personal financial data), I was not successful. The loan was for a mere $40k. I could have driven away in a brand new sports car in one day with my excellent credit, etc. worth more than this loan, but I could not get the loan. Every obstacle was placed in my way--rediculous obstacles, I might add. I opened my business using a loan against my house, which was also supposed to be collateral for the SBA loan by the way. That took five days, and the interest rate was better. Why did I go the SBA route...? The SBA is a scam to American entrepreneurs. I learned the hard way. Oh, by the way, the business is doing well and has employees, which I understand stimulates the economy. Sorry, my soapbox and frustration seeing first-hand our collective tax dollars going to waste. -

Fri, Feb 11, 2011 James No. VA

Has anyone ever done a retrospective on how accurate INPUT's "forecasts" turn out to be?? I notice the press releases disappear quickly from its site, so it is not easy, say, to go back five years. I would like to ask them--but it would be better for WT to do this--to compile a statistical analysis of their forecasting track record. Make sense?

Fri, Feb 11, 2011 Delia

And it will be even better, when the millions of dollars that are supposed to be set aside for small businesses, STOP getting diverted to fortune 500 firms!! THEN we'll see an increase in employment, less Fraud, and more happy USA.

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