Federal Information Technology Segment Outlook, 2013-2018

Deltek forecasts federal demand for vendor-furnished IT hardware, software, professional and outsourcing services, and communications and network services will decline from $112 billion in FY 2013 to $102 billion in FY 2018 at a Compound Annual Growth Rate (CAGR) of -1.9%. Numerous factors impact the outlook across individual segment and sub-segment forecasts.

Key Findings

Budget pressures and changing demands and technologies are forcing federal agencies to reprioritize their technology strategies and change how they manage their IT environments. Deltek predicts that while the overall market will contract over the next few years, there are pockets of opportunity within each market segment and sub-segment as agencies work to improve IT management and increase efficiencies and capabilities.

Significant factors shaping the federal IT market:

• Agencies are delaying tech refresh cycles, streamlining infrastructures, and strategically sourcing to drive down costs of IT hardware. This market will decline from $23.3 billion in FY 2013 to $18.1 billion in FY 2018 at a CAGR of -4.9%.
• Increasing use of enterprise licensing and strategic sourcing to standardize and economize on common software frees resources for virtualization, analytics and data management. Software Products will decline from $12.6 billion in FY 2013 to $11.4 billion in FY 2018 at a CAGR of -2.0%.
• Agencies will require development, integration, and support services to aid expansion in cloud computing, big data, and cybersecurity, however agencies are re-scoping program necessities and using shared and enterprise services to reduce spending. IT Professional Services will decline from $33.1 billion in FY 2013 to $28.6 billion in FY 2018 at a CAGR of -2.9%.
• Data center and infrastructure consolidation, transitioning of some services to a shared service model, and continued scrutiny of services contracts are balanced against workforce constraints, continuity of service demands, cybersecurity needs, and the drive for cloud services, including virtual desktop, cloud storage, and data analytics. IT Outsourcing will grow slightly from $26.0 billion in FY 2013 to $26.4 billion in FY 2018 at a CAGR of 0.3%.
• Growing use of IP and unified communications, and growing demand for satellite and wireless capabilities, is intensifying competition between traditional telecom companies and IT vendors. Communications and Network Services will maintain at $17.6 billion from FY 2013 to FY 2018 at a CAGR of 0.1%, with pockets of growth and contraction.

Critical Insight for Vendors

Deltek’s Federal Information Technology Segment Outlook, 2013-2018 report takes a strategic 5-year view of the market factors impacting federal procurement of IT professional, outsourced, communications, and network services as well as hardware and software.

This report is delivered in PowerPoint® format and includes an Executive Briefing and an Excel® workbook.