As per a report from Input, state and local governments would increase their IT outsourcing spending from $10 billion in 2005 to $18 billion by 2010 due to the need for replacing outdated systems and offset any future government IT workforce shortages. The major factors that would drive growth would be aging IT systems and the retiring age workforce.
It is expected that spending would continue with moderate growth in the year 2006 and after that pronounced growth would materialize as economic and workforce factors would outweigh the political pressure and link aversion of the government. At this point of time state and the local government would be outsourcing more work.
As per James Krouse, Manager, Input:
Although this market remains volatile, improvements in the state governments’ financial positions have eased pressures [that politicize] contract decisions. This lets agencies ‘be more aggressive with their spending, particularly on the outsourcing of technical applications and systems.
The report also states that the fear of relinquishing control of system operations to vendors would cause BPO to grow in a less significant manner.
