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Deltek Expects Federal IT Services Market to Remain Flat through 2017

Deltek, Inc., the leading global provider of enterprise software and information solutions for professional services firms and government contractors, has a new report that forecasts the Federal IT Services Market to remain nearly unchanged through 2017.

According to Deltek’s new report, Federal IT Services Market 2012-2017, federal spending by the U.S. government on vendor-furnished IT services will decrease from $60.9 billion in 2012 to $60.4 billion in 2017. Federal IT services spending includes funding for IT professional services such as program management, systems integration, software development, and technology training as well as IT outsourcing of federal systems, applications and infrastructure.

Despite the decrease in overall spending, contractors will continue to find growth opportunities in areas such as data center consolidation, cybersecurity, cloud computing, and the implementation of big data solutions. These will help keep the market segment stable and potentially grow around specific areas of IT services while shifting funds from other, lower-priority areas.

“Agencies continue to consolidate their data centers and will require continued contractor support to converge their infrastructure,” says Deltek analyst Angie Petty. “These efforts, along with moving to shared services, cloud computing, and more effective cybersecurity and data management, will sustain some measure of demand and present opportunities for services in these areas.”

Doing More with Less

The nearly flat market reflects agencies’ reactions to federal technology priorities, the increasingly uncertain budgetary environment, and the ongoing pressure to do more with less.

In fact, the report finds that due to tighter budgets, increased scrutiny of IT projects, competing priorities, and desire for quick ROI, agencies will move toward smaller scale, phased IT projects that result in more frequent competitions and smaller awards. Contractors should be prepared for an increase in smaller, short turn-around task orders and contracts.

“Phased IT projects will result in greater likelihood for meeting program objectives and budget timelines,” says Deltek analyst John Slye. “Look for continued modular builds using an agile approach to development projects, which means more frequent competitions and smaller awards.”

Key Shifts

According to the report, cloud computing usage will continue to grow over the forecast period, and will be the most critical influence for the IT outsourcing services sub-segment.

“Several of the technology trends that are driving demand for IT services in the short-term will actually reduce demand in the longer-term,” says Petty. “Transformative delivery models like cloud and IT-as-a-service change the nature of many outsourced services and shuffle the competitive card deck for providers. The results will be an even tighter, more competitive market in the future.”

Another significant factor in the market’s slight decline will be strategic sourcing. According to the report, “Agencies with long standing programs already in place are relying on them more heavily, while those without established programs plan to introduce them within the next one to two fiscal years. The result: some IT services contractors shut out of opportunities due to lack of positioning on preferred contract vehicles, and potential harm to small business contractors and ultimately, the economy.”

Table of Contents

The Federal IT Services Market 2012-2017 report provides a broad range of market, agency, and contract information including:

  • Market Catalysts
  • Market Forecasts
  • Agency Analysis
    • Major Initiatives and IT Services Contract Spending
    • Agency Forecasts
    • Sub-Segment Market Factors
    • IT Services Segments in the Top 10 GWACs and IDIQ Vehicles
    • Top GWACs and MA/IDIQ Contracts Held by the Top 10 IT Vendors

The report also includes recommendations for large and small contractors – changes each can implement to be successful during this shrinking market period.

Click here to download the new Federal IT Services Market 2012-2017 report. Or, contact Jessica Primanzon directly to schedule an interview with one of the Deltek industry experts.

About Deltek

Deltek is the leading global provider of enterprise software and information solutions for professional services firms and government contractors. For decades, we have delivered actionable insight that empowers our customers to unlock their business potential. 16,000 organizations and 2 million users in over 80 countries around the world rely on Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and deliver more profitable projects. Deltek – Know more. Do more.® www.deltek.com.

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