State and Local IT Spending to Outpace Federal in 2017 and 2018

Forrester Research takes a look into the future.

by / February 17, 2017

Through the political uncertainty tainting the discussion of technology in government, one market research firm is offering predictions — for 2017 and 2018, it expects IT spending at the federal level to decrease, and state and local spending to rise.

Forrester, the firm behind the report, is forecasting a $4 billion increase in state and local IT spending in 2017, bringing it to a total of $112 billion. Then, in 2018, Forrester expects another $5 billion spending — all while the federal spend falls $1 billion.

Some of the biggest spending areas for state and local government will be cloud-based software, according to the report. Conversely, Forrester expects less spending on hardware and telecommunications.

Economic conditions are the main driver between the state and local predictions.

“The generally strong growth in economic activity, personal income, and property values is bolstering state and local government revenues, allowing these kinds of growth rates in tech budgets,” the report reads.

At the federal level, Forrester’s forecast is based on two assumptions about the new presidential administration: First, that it won’t make big changes to tech spending in its first several months in office; and second, that it will seek to cut federal spending overall throughout its term.

The forecast runs counter to arguments from some that freezing federal hiring, as the new administration has done, will force government agencies to hire vendors to complete work they would otherwise handle internally.