Report: Despite Economy, Federal IT Market Expected to Grow to $98.5 Billion by 2012

According to research from CompassIntelligence.com, the U.S. federal government will spend roughly $98.5 billion on IT goods and services by 2012. This year the U.S. federal government market (Including defense and civilian) is expected to spend roughly $80.6 billion on information technology including telecom, applications, outsourcing, services/support, network hardware, computer hardware, and IT personnel. The annual growth rate last year was 6.5 percent, compared to only 5.3 percent in 2008. Next year, 2009, will experience slightly better growth rates reaching 5.5 percent according to the company.

Major trends and opportunities revolve around replacement of legacy hardware, focus on mobile workforce, maturity of e-government, growth in a high-tech military, greater emphasis on cybersecurity and a focus on green technology initiatives. "Federal government IT spending is expected to remain rather steady, despite economic conditions. State and local governments are expected to feel more of the pain from this current recession," said Stephanie Atkinson, managing partner at Compass Intelligence.

Highlights of the research include:

• Application spending is expected to be the fastest growing segment, experiencing annual growth between 8.6 and 9.8 percent.
• Telecom services spending will be driven by wireline data (IP Telephony) and broadband services, as well as wireless data investments.
• The Defense segment represents about two-thirds of total federal government IT spending.