The forecast growth rate of 3.4% is above the previous forecast’s CAGR due to 1) the SLED market weathering the pandemic downturn and then recovering better/faster than expected, and 2) the new methodology using actual contracting data to the last full year (2022) versus a two-year lag in the older model, which allows more timely tracking of spending in real time. Starting this year, the expanded methodology also offers more specificity, based on 62 Smart Tags or highly specific industry categories of services, which all roll into the major four categories featured in the report.

The SLED market has been transitioning from more of a reactive COVID-response mode in 2020-21 into more of a forward-looking mode in 2022-23 as bid counts for professional services work have been largely restored to more typical levels while spending has increased with some inflation in contract values. SLED staff have also returned after the furloughs in mid-2020. Management consulting and financial investment activity have shown the most growth recently while other types have seen more stability through 2022 in the actual spending data.

The availability of federal stimulus funding has benefited this market by helping to reduce caution in budgeting and purchasing. At a time when the economy has been uncertain and many expect a recession in the near-term, spending and RFP volumes in professional services are not slowing and look very healthy so far, as do other industry groups selling into SLED. The major multi-year federal stimulus packages adopted in 2021 and 2022 are structured to help provide funding through 2026-2030 and should be able to help cushion the worst effects of a recession if it does occur. Governor’s agenda items recently have highlighted the post-pandemic importance of PS themes such as government performance, streamlining and modernization, and reform and reorganization.     

This Deltek forecast details SLED Professional Services spending across four major industry segments, including 1) Financial Investment Activities, 2) Accounting, Tax Preparation, Bookkeeping, & Payroll Services, 3) Management Consulting, and 4) Business Support Services. The new methodology also includes breakouts of eight major buyer segments by level of government, including 1) cities 2) counties, 3) special purpose districts, 4) independent school districts, 5) higher education, 6) state government, 7) tribal government, and 8) other organizations.