Rising government employee retirements combined with an
expected 45 percent increase in state and local IT spending
from $48 billion in fiscal 2005 to $70 billion in 2010
means a lot of outsourcing, according to INPUT, a Reston
Va. based government industry consultant to private vendors.
This development could be of interest to federal managers
considering riding the outsourcing trend as a way to enter
the private sector, especially if the areas of expertise
have to do with managing or providing “professional
services,” a category expected to lead the market in
spending, followed by telecommunications and networks,
according to the company’s most recent annual “state and
local IT market forecast.”
It predicted the market would grow 15 percent in 2008 due
to “the inevitable depletion of experienced technical
government workers,” and said telecom and network
outsourcing will grow with the need for “advanced
interoperable communications systems for coordinating
law enforcement, border security, and homeland security.”
“Vendors need to sit tight for the next couple of years
as the market grows at a respectable, but still moderate,
rate while agencies work in a risk-averse mode,” said
James Krouse, manager of state & local market analysis at
INPUT.
“In about three years, we will see that trend end as state
and local agencies are forced to find outside expertise to
replace a retiring workforce. The only choice many of
these agencies have will be to outsource non-competencies,”
such as IT services, opening up opportunities to
contractors, said Krouse.
