Will Feds Outsource More?

Ann All

The research firm Input is projecting an aggressive growth in outsourcing by federal government agencies, from $13.3 billion in fiscal 2006 to $17.7 billion in fiscal 2011.


This despite the general reluctance government agencies exhibit toward outsourcing, as described by Input analyst Chris Dixon in an IT Business Edge interview.


Dixon says that the government has been more inclined to run its own systems, whether IT or anything else, because "It's politically more damaging when you put trust in another organization and it lets you down than when you can't manage it yourself."


Nonetheless, a compelling convergence of forces will cause the feds to overcome their usual reluctance to outsource, Input predicts.


The Office of Management and Budget is putting pressure on agencies to reduce IT spending. Much of the available budget is being directed to the costly war on terror. A large number of federal employees will retire in the coming years.


And many agencies find it easier to outsource than to comply with lengthy and complicated competitive sourcing policies introduced during the Bush administration. Those policies have led to a dramatic increase in federal outsourcing contracts, from $207 billion in 2000 to $400 billion in 2006.


Many contractors that do business with the government are apparently gearing up to capitalize on the feds' new willingness to outsource, largely by beefing up their BPO capabilities.


Still, many observers do not agree with Input's forecast. They note, for example, that newly elected Democratic officials may act to change procurement policies.

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