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Deltek, Inc. (Nasdaq: PROJ), the
leading global provider of enterprise software and information solutions for government contractors and professional services firms, conducted a research study that identifies growth opportunities in the midst of a declining Federal IT market. According to the GovWin IQ study, with the recent and projected federal budget cuts, spending on information technology (IT) products and services by federal agencies is projected to experience a slight decline over the next five years and significant disruption that will create both opportunities and challenges for federal IT providers.
Deltek’s new report,
Federal Information Technology Market, 2012-2017, projects federal IT spending will decrease from $121 billion in 2012 to $113 billion by 2017 at a -1.4 percent Compound Annual Growth Rate (CAGR).
Budget pressures and IT mandates by the Obama administration are forcing agencies to drive cost savings and consolidation in their IT infrastructures. As a result, Deltek projects most agencies will have reduced IT budgets over the next five years.
However, budget and policy reforms, established as the first steps in forcing agency IT transformation, are driving investments in key areas of IT that represent growth opportunities for government contractors. Some of the most prominent investment areas are focused around cost-saving initiatives. These include analytics to ferret out waste, fraud and abuse in government programs, the adoption of cloud computing and the consolidation of redundant data centers and systems.
In addition, the expanding role of the federal government in areas such as health care, foreign affairs and cybersecurity is driving investment in the underpinning resources and systems that support these initiatives. “While the overall market is declining, we see some pockets of opportunity that companies can tap into to soften the impact on their business,” says Deniece Peterson, Director of Deltek’s GovWin IQ Federal Industry Analysis program.