Media Releases
January 23, 2006
State & Local IT Outsourcing Spending to Grow 75 Percent by FY10
Outdated systems and workforce shortages expected to drive unprecedented growth
Reston, VA – January 24, 2006 – State and local government outsourcing expenditures on information technology (IT) are expected to grow from $10 billion in fiscal year 2005 to nearly $18 billion by fiscal year 2010 (FY10), according to a report released today by GovWin, the authority on government business. Despite many government officials' claims, outdated system infrastructures and an aging workforce will remain major factors forcing the market's pronounced 75 percent growth over the next five years.
GovWin projects state and local IT outsourcing will continue to grow moderately through FY06. Real pronounced growth will materialize in FY07 as economic and workforce factors increasingly outweigh political pressure and risk aversion and begin to drive the need for governments to seek outsourcing partners to support uninterrupted operations and improve efficiencies.
“Outsourcing has always generated significant political debate, which in some cases has stalled this sector's growth at the state and local level,” stated James Krouse, manager, state & local market analysis at GovWin. “Although this market remains volatile, improvements in the state governments' financial positions have eased pressures politicizing contract decisions. This has allowed agencies to be more aggressive with their spending, particularly on the outsourcing of technical applications and systems.”
According to the report, outsourcing sectors such as Applications Management, Platform Operations, and Desktop Services will continue to grow aggressively and will be the catalyst for the majority of growth. Lingering fears of relinquishing excessive control of system operations to outside vendors will cause more comprehensive outsourcing areas, such as Business Process Outsourcing (BPO), to grow less significantly.
“As the economy continues a strong recovery, we expect outsourcing opportunities to increase on the state and local level,” added Krouse. “However, system integrators should remain vigilant in researching government opportunities on a case-by-case basis. The loss of seasoned government workers will affect nearly all state & local agencies. While this will be a significant stimulus for outsourcing contract decisions, ongoing maintenance of outdated legacy systems will provide more definite targets for outsourcing contract opportunities.”
GovWin's State & Local Outsourcing MarketView report is available to GovWin Network™ members subscribing to the State & Local Market Analysis program. For more information on the subscription program, call 703-707-3500 or submit an online information request.
About GovWin
GovWin is the authority on government business. Established in 1974, GovWin helps companies develop federal, state, and local government business and helps public sector organizations achieve their objectives. Over 1,000 members, including small specialized companies, new entrants to the public sector, and the largest government contractors and agencies, rely on GovWin for the latest and most comprehensive procurement and market information, consulting, powerful sales management tools, and educational & networking events. For more information about GovWin, visit www.GovWin.com or call 703-707-3500.
* Some links on this page may require a login and password to view. For more information complete an online information request or call (800) 456-2009.
