Mandatory caps on discretionary spending placed onto the federal government as part of a deal to raise the debt limit will likely not have a major effect on information technology spending, says Reston, Va.-based market analysis firm INPUT.

"We don't believe that IT will take a major hit under those caps because of the general acceptance that IT brings efficiency and cost-savings, and there are bigger targets," said Deniece Peterson, senior manager of federal industry analysis. The "IT spend is only about 8 percent of discretionary spending," she added.

The debt limit deal's spending caps are also roughly 8 percent lower than the projections contained in President Barack Obama's fiscal 2012 budget request, Peterson said, "but we don't think that that difference will be taken out of IT."

Overall growth in federal discretionary spending has outpaced that of IT since fiscal 2004, notes an analysis from the firm released August 3.

INPUT projects that federal IT spending will grow from a current level of $93.6 billion to $99 billion in fiscal 2016, a compound annual growth rate of 1.1 percent.  The spending figures include estimates of IT spending not reported to the Office of Management and Budget.  

The analysis also predicts that cloud computing will encounter an inflection point in adoption around mid-2014, causing a decrease in the amount of money federal agencies spend on hardware.

Spending on software will increase with a CAGR of 6.3 percent, INPUT says, reaching $13.7 billion in in fiscal 2016.

In addition, INPUT predicts a decrease in IT services spending, despite also stating that the federal workforce is likely to drop as a result of the discretionary spending caps.

INPUT says services spending will go down to $36.5 billion in 2016 from its current level of $39.5 billion, a CAGR of -1.6 percent. Cloud computing adoption is a major reason why, says the analysis.

For more:
- see a press release on the INPUT analysis

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