Federal IT Market $111.9 Billion By 2015

Civilian agencies will spend the most money on IT services, while intelligence agencies will see the largest growth in spending.
The opportunity for IT firms that serve the federal government will reach $111.9 billion by 2015, growing 5.4% annually in the next five years, according to a forthcoming report from Input Research.

The firm previewed some of the report's findings in a talk senior VP of research and analysis Kevin Plexico gave at the firm's MarketView 2010 conference this week. Input spokeswoman Mary Beth Cockerham said that the firm plans to release the report in June.

This year alone, the federal IT market is expected to be $95.4 billion, with $86 billion of that going to contracted IT services, according to the research.

Civilian agencies will spend the most on IT in the next five years -- $58.5 billion by 2015, which represents a compound annual growth rate of 5.6%, according to Input.

However, it's intelligence agencies that will see the most growth in spending -- 6.4% -- to reach $13.5 billion in IT spending in 2015. The defense sector is expected to spend $39.9 billion by 2015, representing growth of 4.8%, according to the research.

By the end of this year, civilian agencies are expected to spend $44.5 billion; defense will spend $31.6 billion; and intelligence will spend $9.9 billion, according to Input's research.

Of several types of services the federal government will look for vendors to fulfill, professional services will experience the most growth in the next five years, with a compound annual growth rate of 7.1%.

Systems integration will experience the next-highest growth rate (6.3%), followed by outsourcing (5.6%), software products (5.2%), communications and network services (4.9%), and computer equipment (3%).

Overall, the federal government's role in the U.S. economy is expanding, particularly in social, regulatory, and security-related programs, according to Input. However, federal IT contractors should look at budget projections for IT spending with skepticism because they are often conservative.

Plexico also laid out Input's view of short-term and long-term IT goals the federal government has, and where its priorities lay. Near-term goals are consolidation, security and transparency, and accountability, according to the firm.

These goals are clearly evident in many of the IT investments federal agencies have unveiled in the last year, particularly with the Department of Homeland Security's various cybersecurity efforts and the Open Government Directive, the Obama administration's government-wide transparency project. This week, government agencies laid out their specific plans to improve the transparency of government operations and data and increase engagement with the public to meet an Open Government deadline.

Looking further ahead, Input predicts the government will begin spending more in the health, energy, and environment sectors to increase the use of IT in those areas.

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