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Federal IT Uncertainty Under Trump Focuses Attention on $101 Billion State and Local Market

In 2017, the state and local government market is expected to spend an estimated $101.3 billion on IT compared to just $81.6 billion for federal government (excluding defense).

by Joe Morris / March 2, 2017

With uncertainty spreading throughout the federal government and President Trump expected to cut discretionary spending, including technology, consulting firms and federal IT vendors are suddenly shifting course to focus on the state and local government market. 

Trump has already announced a hiring freeze, and he plans to cut spending across all agencies except the military and defense. Over the past two weeks, I’ve noticed an uptick in coverage on the state and local market in direct response to these looming federal changes and proposals. As someone who has covered the state and local government (SLG) technology market for nearly 10 years, I found it humorous to see articles stating things that we’ve all known for quite some time, such as “state and local government may hold the most promise for IT job seekers and IT vendors,” and that the SLG market is performing better than the federal IT market. 

This is Good News … But Not Breaking News

After all, the state and local government market has been outperforming federal government for the past decade. In 2017, the SLG market is expected to spend an estimated $101.3 billion on IT compared to just $81.6 billion for federal government (excluding defense). The state and local government market is larger than many inside the Beltway give it credit for. For example, roughly, 19 million people are employed nationally by state and local governments compared to roughly 2.5 million within the federal government. Furthermore, if states were private companies, 24 states would rank in the Fortune 100 based on their overall budget size.

Here’s the good news: States and localities have been doubling down on technology. The Center for Digital Government, sister organization to Government Technology, has seen firsthand how technology has played a significant role in helping states and localities successfully climb out of the Great Recession. In fact,, our market and sales intelligence platform, has measured a steady increase in the volume of IT procurements — going all the way back to 2011. 

What does this mean? 

  • Federal IT Vendors Looking to Cash In — Federal vendors are likely to begin paying attention to the SLG market and, ultimately, they will compete for business. If your company is a long-standing partner of states and localities, differentiate yourself by demonstrating your commitment to this market and your customer. You are their partner — a partner that won't fly in and out based on the federal budget outlook. 
  • CIOs Value Trusted Advisers — If you are a vendor that has primarily focused on the federal government, you need to know that your commitment to states and localities may be initially questioned by the SLG chief information officer. Are you willing to be a strategic partner? Or are you here just to weather the storm? Be prepared to answer these questions.
  • 2017 Will Be a Good Year for States and Localities — Are you interested in understanding the market opportunity that is beyond the Beltway in D.C.? Join us at our Beyond the Beltway conference in Reston, Va., to hear our outlook on the state and local government IT market.

This story was originally published by GovTech Navigator.

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