What Does the Waning Bull Market Mean for Federal IT Services Contractors?

Aggressive investment by federal agencies to modernize and secure monolithic IT infrastructures, particularly healthcare-related IT systems, and digitize defense networks has resulted in an expanding federal IT market. In federal fiscal year (FFY) 2020, FFY21, FFY22 and FFY23 the market experienced unprecedented growth, at 8.1%, 8.5%, 7.9% and 8.5% year-to-year, respectively, on a weighted average basis.

Additionally, TBR is currently tracking federal IT annual revenue growth of 6% to 8% to between $68 billion and $69 billion in total market value by the end of FFY24 (ending Sept. 30, 2024). (Data based on total federal IT revenue earned by the 11 federal systems integrators tracked in TBR’s Federal IT Services Benchmark.)

Looking toward FFY25, the Biden administration is seeking the smallest increase in federal civilian technology spend in many years, while the Department of Defense’s FFY25 request for IT and cyberspace activities is down from FFY24.

As was the case in 2020, election-related disruptions could undermine the ongoing boom in the civilian IT market, at least temporarily. IT leaders in agencies are under increasing pressure to demonstrate how effectively they have invested the IT budget windfall they have enjoyed since FFY20. Even with slowing budget growth, tech priorities remain unchanged, with citizen-facing agencies investing heavily in AI and other technologies to optimize citizen experience and engagement.

Join TBR’s Federal IT Services Senior Analyst John Caucis, Principal Analyst & IT Services Practice Manager Patrick Heffernan, and Federal IT Services Analyst James Wichert on Tuesday, Sept. 17, 2024, at 10 a.m. EDT/7 a.m. PDT for an in-depth discussion and Q&A on the current state of the federal IT market and expectations for the future.

In This FREE TBR Insights Live Session on the State of the Federal IT Market You’ll Learn:

Drivers behind overall federal IT market growth, according to findings from TBR’s most recent Federal IT Services Benchmark
Top trends in civilian, defense and intelligence sectors
How federal systems integrators (FSIs) tracked by TBR are positioning themselves for FFY25
Details on the newest alliances, acquisitions and solution introduced by TBR-benchmarked vendors

TBR Insights Live sessions are held typically on Thursdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous sessions can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].