The United States, seeking to modernize technology and reduce costs, is embracing cloud computing, but privacy and security issues need to be ironed out during a decade-long transition, U.S. officials said on Thursday.

In a fledgling and rapidly growing industry, companies like Google Inc, Microsoft Corp and Inc, the world's biggest maker of Web-based software, are trying to move rapidly to provide cloud computing services -- where data is stored on remote servers -- to corporations and the U.S. government, which spends about $80 billion each year on technology.

The cloud can allow teleworkers to easily and securely access their data and work from wherever they happen to be, Mike Bradshaw, who heads Google's federal cloud computing program, said at a congressional hearing.

The cloud saves taxpayers money, said Bradshaw.

Proponents say cloud computing allows employees to collaborate more easily, reduces the time it takes to install patches on thousands of individual desktops and provides greater flexibility for U.S. employees working remotely, which in turn helps reduce energy consumption due to less travel.

Concerns about whether the U.S. government should further adopt cloud computing largely center on security of U.S. data and networks from malicious attacks, snooping enemy governments and theft of information by criminal organizations.

At a hearing to examine the benefits and risks to cloud computing, lawmakers and government officials said while estimates on costs savings range widely, issues over security, privacy, and data management remain unaddressed.

As we move to the cloud, we must be vigilant in our efforts to ensure the security of government information, protect the privacy of our citizens, and safeguard our national security interests, U.S. Chief Information Officer Vivek Kundra told lawmakers.

Last year the U.S. government opened an office to coordinate efforts in developing cloud computing standards, security and procurement across the various agencies.

While the transition is expected to take a decade, several U.S. agencies including the departments of energy and defense and the Securities and Exchange Commission have adopted it.

Each agency decides whether to adopt cloud computing, but fragmentation among agencies on standards and procurement procedures has resulted in high costs and lost time, Kundra said.

As a result, the National Institute of Standards and Technology is developing standards and the Government Services Administration is looking into streamlined procurement process, he said.

The U.S. move to cloud computing also comes during concerns over global cyber attacks, illustrated by a dispute between giant U.S. Internet company Google and China over an attack Google said came from within China.

(Reporting by John Poirier, editing by Gerald E. McCormick)