Other companies are also angling to grab a piece of the market.

Google has opened an office in Reston, Virginia -- such as the corporate version of Google Docs -- to federal agencies. Several months ago, on Amazon.com's central repository of public data available through Amazon Web Services.

For the public sector, there may be some security concerns about using software that stores data in a cloud, Jimmy Lin, an assistant professor of information studies at the University of Maryland .

"The government may be outsourcing functions to contractors now but this takes it to a whole new level," he said. "And what happens if Google gets hacked by a third party? The answer is, nobody knows."

Still, many think that cloud-computing based applications hold great potential for the public sector.