James Krouse, manager of state and local markets analysis at Input, said he expects states increasingly to turn to outsourcing to deal with an unprecedented set of problems, including aging IT workforces, outdated systems, and pay scales and technologies that make government service unattractive to college graduates. "The leading-edge technologies are in the private sector," he said.

The county of San Diego awarded one of the first big local-government outsourcing contracts in the nation in 1999 to Computer Sciences Corp. The county's board of supervisors Tuesday will consider a different vendor, Northrop Grumman, after rebidding the work. At stake is a seven-year contract to manage IT for the 17,000-employee county government, which operates on a $4 billion budget.

Krouse sees the commonwealth of Virginia as a bellwether for the nation. In November, Virginia officials approved a 10-year, $2 billion agreement with Northrop Grumman to manage the state government's IT operations. More than 900 employees of the Virginia Information Technologies Agency will get job offers through the contract or can choose to stay with the state, according to details of the plan released in November.

"Virginia is a prime case that is looking at something that could be a precursor for things to come," said Krouse.

Tom Wade, CIO for the state of Georgia, said outsourcing is something the state will look at, although it has no definitive plans to do so. He agreed that pay is an issue and said his IT vacancy rate is about 15 percent because of improvements in private-sector hiring.