Budget constraints could help IT

IT services contracts could nearly double by 2015, report forecasts

It may sound paradoxical, but the intense pressure from lawmakers to cut federal spending could improve the fortunes of federal IT services, and the companies that  provide the technologies.

Technology can be used to reduce costs, and apart from that, there is a continued drive for technologiues to facilitate transparency and communications, according to  John Slye, Input principal analyst. Therefore, Input forecasts demand for federal IT contracting services  to increase from $38 billion in 2010 to $52 billion in 2015, according a new report from Input.

“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.

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