Info tech outsourcing to double in five years, study says

As the government faces an impending shortfall of skilled technology workers, the federal technology outsourcing market will grow more than twofold over the next five years, according to a report issued Monday by IT analysis and marketing firm INPUT in Chantilly, Va. By 2006, agencies will spend $13.2 billion on private workers to manage and run many of their technology systems, including telecommunications networks, desktop computers and technology infrastructure, the report said. With this year's base of $6.3 billion in spending, the forecast represents an annual growth rate of almost 16 percent. Payton Smith, INPUT's lead analyst for strategic market research, said agencies have no choice but to release more outsourcing dollars as waves of government workers near retirement age. "As significant numbers of federal employees retire from program management and technical positions over the next five years, outsourcing may become the only viable option," Smith said. More than half of the government's 62,000-person technology workforce will retire in the next five years, according to Commerce Department research. The approaching shortage is already being felt at the agency level. For example, 8 percent of the more than 14,000 people employed by the General Services Administration are classified as information technology workers. The number of GSA tech workers has dropped 14 percent over the past five years due to retirements, according to GSA Administrator Stephen Perry. The government has been hampered in the recruitment of new technology talent because of its inability to match private sector salaries or to hire new staff quickly. The Office of Personnel Management has sought to lure more corporate technology workers, recent college graduates and young people into government work by creating higher pay rates for technology employees. Currently, government technology salaries are about half what workers can earn at a private firm. INPUT's outsourcing study comes on the heels of its recent prediction that overall agency spending on technology goods and services will increase by 65 percent over the next five years. Smith said information security, data recovery and interagency information-sharing would be top spending priorities in the wake of the Sept. 11 attacks, which have turned the already strong federal market into a new target for commercial firms suffering punishing losses in the shrinking commercial sector.