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US Government Spending on IT Services

February 16, 2009

I recently conducted an extensive case study of the US Federal Government’s spending on IT services as a part of my graduate studies. It includes a summary of the market, how it is segmented, and opportunities for expansion. Here is a snippet from the report:

Market Overview
The market for IT services in the US Federal Government is over $68 billion in 2009 and continues to grow at 5% annually. IT demand from the government is segmented between two very different concerns:

  • Defense information and intelligence systems
  • Line-of-Business application deployments

These concerns, and the skills required to deliver them, segment this market as shown in the figure below. Defense suppliers specialize in the design and deployment of the advanced custom systems market segment, which is over $32 billion in revenue annually. The handful of suppliers competing for a single buyer of services creates a monopsony and significant cooperation between the suppliers.

US Government IT Market Segmentation

US Government IT Market Segmentation

The commercial IT market for Line-of-Business applications, which primarily serves the civilian agencies of the government, has a far larger customer base that includes companies around the globe. This creates intense competition on cost and efficiency in the delivery of these standard services.

I am offering up the report free for non-commercial use to anyone who finds this interesting or valuable. If you find inaccuracies in the report, or if you would like to discuss this topic further, please leave a comment!

You can download the full report here. Enjoy!

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