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Wednesday, November 01, 2006

Study forecasts downturn in IT spending

Agency spending on information technology products and services will fall 10 percent to 25 percent over the next three years, according to a report released Friday by a consulting firm launched the same day.

The report, "Government 2.0," also predicted double-digit growth in dollars going to companies that will directly support or even take over government programs. It was published by Government Futures, a strategy and consulting company founded by a team led by federal market insider Bruce McConnell, and is based in part on a survey of 130 executives in federal agencies and firms selling to government, academics and other observers.

In the next 36 months, federal buying power is likely to move away from technologists into the hands of program managers, the report stated. It said changes in federal demand will result in a shift away from firms providing IT services such as seat management, software maintenance, hosting and IT staff, and toward companies that manage grants and loans, finances and personnel; answer client queries; handle logistics and investigations; and collect debts and do land management.

Less than a third believe the Office of Management and Budget's lines of business initiative encouraging agencies to consolidate back-end systems in areas including financial management and human resources will have disappeared by 2010.

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