Forecast Decodes IT Market Hot Spots
Published: July 02, 2014
Austerity may be the new norm for federal spending, but both sides of the government IT contracting table are still looking for a big payoff.
The Federal Industry Analysis Team’s flagship forecast report, "Federal Information Technology Market, 2014–2019", predicts a decline in the federal IT market from $101 billion in FY 2014 to $94 billion by FY 2019, reflecting a -1.6% Compound Annual Growth Rate (CAGR). The report analysis examines the diverse influences shaping individual market segments and federal agency buying patterns, calling out the primary drivers and inhibitors affecting the IT investment decisions of federal agencies.
delays to technology refresh cycles and efforts to scavenge existing commodity IT resources. These cost reduction initiatives are expected to facilitate operating on a new, lower budget baseline.
A lower baseline typically tracks to lower levels of contracted spending. In many cases, however, agencies intend to reinvest the savings that these changes produce. These reinvestment goals stand to provide contractors with a chance to provide additional products and services. Unlike in the past when agencies might have used recovered funds to pursue ‘nice to have’ capabilities, they are now in the position of stretching to make ends meet.
The Federal Industry Analysis (FIA) Team foresees the recent downward spending trend continuing in coming years but not entirely uniformly. The team’s forecast draws on a whole host of primary and secondary research. Looking beyond the funding reported through the Office of Management and Budget (OMB), the FIA team’s market sizing includes spending from the judicial and legislative branches, the intelligence community, federal organizations that are not subject to federal IT budget reporting requirements, and IT embedded in large defense systems. This off book spending helps to offer a more complete view of government buying.
These mFor more analysis of contractor-addressable budgets across the federal Hardware, Software, IT Services, and Communications and Network Services markets, see our new GovWin IQ report “Federal Information Technology Market, 2014-2019.”