Deltek’s Annual Federal IT Forecast Steers Contractors toward Bright Spots
Published: July 08, 2015
Deltek’s annually anticipated forecast report, “Federal Information Technology Market, 2015-2020,” predicts a slight decline in the federal IT market from $97.7 billion in FY 2015 to $94.4 billion in FY 2020, reflecting a -0.7% Compound Annual Growth Rate (CAGR). The report details key federal initiatives, strategies, and spending priorities over the next five years. It also delves into projected IT spending and investments for each top federal agency.
Agencies continue to face budget constraints while trying to modernize IT systems, increase efficiency, and improve citizen services. Deltek’s research indicates agency IT leaders plan to concentrate on mission critical projects and reduce spending in lesser priority areas, creating pockets of opportunity across the federal landscape.
Deltek interviews with agency IT managers and executives revealed that most (60%) believe that their organization’s IT budget will remain flat over the next three years, with hardware and IT professional services taking the biggest hit as far as contracted spending.
If sequestration is allowed to happen, both government IT officials and industry executives believe this will result in project delays and re-scoping of projects. Deltek’s research shows that the contracting community is more confident than their federal counterparts that sequestration would lead to cancelled projects or spur more aggressive movement to shared services.
Deltek also found that agencies and industry expect moderate impact from IT reform initiatives such as FITARA and digital service teams. Federal respondents gave more creed to the impact of acquisition reform, FITARA, and new White House IT leadership than industry respondents.
What to expect in the federal IT market over the next five years:
- IT spending to remain relatively flat over the forecast period, with growth opportunities in key areas such as cloud, cybersecurity, big data and infrastructure modernization.
- A shaky start to FY 2016 due to the disconnect between Congress and the Obama Administration regarding sequestration, causing agencies to remain fiscally conservative.
- Ongoing IT asset discovery which continues to drive shifts in IT portfolio strategies such as application rationalization and migration to shared services.
- Heavy reliance on GWACs and increasingly on GSA Schedules to fulfill IT requirements across all segments.
For more analysis of contractor-addressable budgets across the federal Hardware, Software, IT Services, and Communications and Network Services markets, see our new Deltek report, “Federal Information Technology Market, 2015-2020.”