Nov 1, 2003 12:00 PM, By Bill McCarthy

Continuing fiscal pressure and the aging government workforce are significant factors driving state and local IT outsourcing from about $10 billion in fiscal 2003 to more than $23 billion by fiscal 2008, according to a report released by INPUT, a research company for companies doing business with government.

“The opportunity to outsource non-core government competencies in information technology is becoming increasingly attractive to state and local governments within the current economy,” says James Krouse, manager of State and Local Market Analysis at INPUT. “The growth will become dramatic as retirements outpace the ability of governments to staff important technical functional areas.”

Shortages of experienced government IT workers and the necessity to replace outdated legacy systems, combined with the widest gap between state revenues and GDP for more than 20 years, will push the government outsourcing market to a compound annual growth rate of 17 percent over the next five years, according to INPUT.

Medicaid and Welfare management, major program areas that have repetitive processes and recurring transactions, will lead service areas for outsourcing, according to the study.

A summary of INPUT's State & Local Outsourcing MarketView, is available at stateoutsourcing.input.com.

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