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INPUT Predicts Federal IT Outsourcing Market Will Reach $18 Billion by FY 2011

Agencies outsource mission-critical functions in response to new pressures

RESTON, Va., Feb. 14 /PRNewswire/ -- The federal IT outsourcing market is expected to increase at a compound annual growth rate of 5.9 percent, from $13.3 billion in FY 2006 to $17.7 billion by FY 2011, according to a report released today by INPUT, the authority on government business. The report emphasizes a continued shift within the federal market away from a government- owned, government-operated model toward a contractor-owned, contractor- operated approach. This shift is fueled by the impending federal IT workforce shortage, war in Iraq, and federal contract spending slowdown, already in motion before the passage of recent Continuing Resolutions.

"Increasingly, as agencies outsource more core activities, they may not necessarily want to compete business as an A-76 competition when they can multi-source to procure needed services at a much faster rate," said Dr. Trina Dinavo, senior federal market analyst at INPUT. The Office of Management and Budget's Lines of Business initiative and lengthy competitive sourcing competitions will cause agencies to seek more viable cost-effective and efficient alternatives through outsourcing. "In addition, as the new Congress questions the current competitive sourcing cost savings formula, agencies will choose the path of least resistance as a matter of expediency," added Dinavo.

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. The level of federal IT skill in the out years is not very promising to meet the federal IT demands of the future. As baby boomers choose retirement, federal agencies will outsource more and more mission-critical functions if the talent needed to perform these tasks can be done more efficiently and effectively by contract personnel in the private sector.

"By the end of the forecasting period, agencies will have switched to a wholesale preference for smaller outsourcing contracts or multi-sourcing contract arrangements. This could be viewed as a total about-face when considering the recent trend in favor of the outsourcing mega-deal," said Dinavo. To obtain the IT talent required and to minimize the costs of acquiring new technologies in relatively short time frames, the report maintains that 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.

INPUT's Federal IT Outsourcing MarketView report is available to INPUT Network(TM) members. For more information on becoming a member, call 1-888-99-INPUT or submit an online information request at member.input.com.


INPUT is the authority on government business. Established in 1974, INPUT helps companies develop federal, state, and local government business and helps public sector organizations achieve their objectives. Over 1,300 members, including small specialized companies, new entrants to the public sector, and the largest government contractors and agencies, rely on INPUT for the latest and most comprehensive procurement and market information, consulting, powerful sales management tools, and educational & networking events. For more information about INPUT, visit http://www.input.com/ or call 703-707-3500.

Proper use of name is INPUT Media Contact: Marc Wojno [email protected] 703-707-4157


CONTACT: Marc Wojnom of INPUT, +1-703-707-4157, [email protected]

Web site: http://www.input.com/

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