Worldwide government IT spending is forecast to total $565,7-billion in 2022, an increase of 5% from 2021, according to Gartner.

“The last few years of enduring pandemic challenges have mobilized a wave of digital transformation activities in government organisations across the world,” says 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 2022, government IT spending is forecast to increase across all segments except internal services and telecom services. Continuing the trend from 2021, software is forecast to record the strongest growth across all segments in 2022. As legacy modernisation continues to be a priority in government organisations, growth in the data centre systems segment will continue to slow though the forecast period.

Worldwide Government IT Spending, 2021-2022 (Millions of US Dollars)

 2021 Spending2021 Growth (%)2022 Spending2022 Growth (%)2023 Spending2023 Growth (%)
Data Center Systems25,0857.326,1374.226,6421.9
Internal Services68,241-2.168,188-0.170,7673.8
IT Services191,84110.7204,2066.5220,9978.2
Telecom Services69,1901.167,102-3.067,1930.1

Source: Gartner (June 2022)

Governments continue to invest in critical application software that directly support end user interfaces driving strong growth in this segment. Spending on telecom services is set to decrease in 2022 as governments reduce spending on expensive legacy systems in favor of digital service delivery models.

XaaS model emerges

Anything-as-a-Service (XaaS) is gaining popularity across government organisations as it provides better return on investment normalising IT spend over time making budgeting for IT more predictable, while avoiding the accrual of technical debt. Gartner predicts 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,” says Snyder. “Fifty-four percent 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.”

With the ongoing talent challenges facing organisations, XaaS makes it easier for government organisations to find the right talent via XaaS operating models. XaaS 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.