New York: The American government information technology (IT) outsourcing market is expected to increase at a compound annual growth rate of 5.9%, from $13.3 billion (Rs58,573 crore) in 2006 to $17.7 billion (Rs77,950 crore) by 2011, a new report has said.
There will be continued shift within federal market away from a government-owned, government-operated model towards a contract-operated approach, the report said. This shift, it says, is fuelled by the impending federal IT workforce shortage, war in Iraq and federal contract spending slowdown.
The report has been prepared by INPUT, which helps companies develop federal, state and local government business and counts 1,300 members including small specialised companies and new entrants to the public sector .
According to the report, perhaps the most important factor leading towards a greater reliance on outsourcing in the future is the fact that a significant portion of the federal technology-related workforce is entering retirement age.
To obtain the IT talent required and to minimize the costs of acquiring new technologies in relatively short time frames, spending in the areas of business process outsourcing and application services will contribute the greatest growth to the federal outsourcing market over the forecast period, the report said.