The federal IT outsourcing market will increase by more than four billion dollars by fiscal year 2010, according to a recent report by market research firm, Input.

The market is expected to grow at a compound annual rate of 8 percent, increasing from $12.2 billion dollars in FY 2005 to $17.6 billion in FY 2010.

New market drivers, namely the Office of Management and Budget’s (OMB) Lines of Business (LoB) initiative, continue to compel agencies to spend on outsourcing. For each LoB, including human resource management, financial management and grants management among others, government agencies will have to submit their business cases to Centers of Excellence—the agencies deemed qualified to perform LoB services.

"A number of factors have combined to make outsourcing one of the fastest growing federal market segments over the past few years," said Chris Campbell, senior analyst, federal market analysis for Input. "In a time of war, a deficit, and tightening federal budgets, Input expects the federal IT outsourcing to remain one of the healthiest federal markets. Generally speaking, the business challenges and market factors driving the decision to outsource are similar between the private and public sectors. Most often, outsourcing is prompted by the need to supplement internal technical resources, reduce cost, infuse new technology, or standardize and streamline operations."

--Al Sacco