According to a recent report from INPUT, the authority on government business, budget deficits will suppress state and local IT spending in 2009, and budgets will remain tight throughout the forecast period. However, demographic pressures will force states and localities to seek new administrative efficiencies in order to redirect money toward priorities areas. Professional services and outsourcing will account for 48.4% of the market's $16.5 billion in growth as state and local governments seek to automate manual processes, augment staffing, and take advantage of private-sector competencies.
INPUT expects tight budgets to put further pressure on hardware investments as state and local governments consolidate IT infrastructure in an effort to eliminate duplicative spending. This will call for tighter relationships between hardware manufacturers, value-added resellers (VARs), and the major integrators helping governments identify savings points and scope out solutions. Where major implementations are not required governments will increasingly look toward hosted software (software-as-a-service) options.
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