SMB Share of Federal IT Market Shrinking

Small and medium-size companies have lost a significant chunk of the federal IT market to large companies, a research firm says. However, it appears more small companies are in that market space.

SMBs saw their share drop 15 percent in 2005 from 2003, while large companies increased their share an equal amount to 65 percent. "We have seen a dramatic shift in the way the U.S. federal government acquires technology," Kevin Plexico, executive vice president for INPUT, said in a statement.

The decline has occurred despite an across-the-board increase of 63 percent in the number of companies participating in the market, INPUT said. The number of companies earning less than $10 million in spending on prime contracts increased to 18,000 last year from 11,000 in 2003.

"The money spent by the federal government is getting spread over a significantly larger number of companies, which demonstrates that the barriers to entering the market have decreased," Plexico said.