Worldwide government IT spending forecasted to grow 5% in 2022

The global government IT spending is forecasted to total $565.7 billion in 2022, an increase of 5% from 2021, according to consulting firm Gartner.

Government IT spending is forecasted to increase across all segments except internal services, -0.1%, and telecom services, -3%. Continuing the trend from 2021, software is predicted to record a growth of 10.4%, a rise from $146,952 million to $162,278 million, the strongest growth across all segments in 2022. Additionally, as legacy modernisation continues to be a priority in government organisations, growth in the data centre systems segment will continue to slow through the forecast period, falling from 7.3% to 4.2% with a spending of $26,137 million.

The research found that governments continue to invest in critical application software that directly supports end-user interfaces driving strong growth in this segment. Spending on telecom services is set to decrease in 2022, from 69,190 million to $67,102 million, as governments reduce spending on expensive legacy systems in favour of digital service delivery models.

“The last few years of enduring pandemic challenges have mobilised a wave of digital transformation activities in government organisations across the world,” said Daniel Snyder, director analyst at Gartner. “Governments are executing innovative activities by harnessing technology to streamline digital services, advance automation processes and evolve citizen experiences.”

In the UK specifically, three sectors are set to experience negative growth in 2022: data centre systems (-0.6%), devices (-0.9%), and telecom services (-4.1%). The strongest sector for growth is software, rising from $6,934 million to $7,398 million, with a growth of 6.7% in 2022. This is followed by IT services (4.9%) and internal services (0.6%). Total 2022 growth for the country is estimated to be 3.8%, with Gartner predicting that next year it will reach 6.9%. Additionally, total spending in 2022 is predicted to be $25,532 million which is estimated to rise to $27,289 in 2023.

Gartner added that Anything-as-a-Service (XaaS) is gaining popularity across government organisations as it provides a better return on investment, normalising IT spending over time to help make budgeting for IT more predictable while avoiding the accrual of technical debt. The consulting firm claims that by 2026, most government agencies’ new IT investments will be made in XaaS solutions.

“The pandemic sped up public-sector adoption of cloud solutions and the XaaS model for accelerated legacy modernisation and new service implementations,” added Snyder. “Fifty-four per cent of government CIOs responding to the 2022 Gartner CIO Survey indicated that they expect to allocate additional funding to cloud platforms in 2022, while 35% will decrease investments in legacy infrastructure and data centre technologies.”

Gartner added that XaaS makes it easier for government organisations to find the right talent via XaaS operating models. Its delivery models require different internal IT skill sets and place less demand on the organisation to develop or acquire emerging IT skills, which are often hard to find and difficult for governments to afford.