The worldwide government IT spending is projected to experience a substantial increase in 2023, with a growth rate of 7.6% compared to the previous year, according to a recent forecast by global research and advisory firm, Gartner. The anticipated worldwide government IT expenditure for 2023 is estimated to reach a staggering $589.8 billion.
The increase in government IT spending can be attributed to the growing recognition of digital technologies’ importance in addressing global uncertainties and challenges. Apeksha Kaushik, Principal Analyst at Gartner, emphasized that government Chief Information Officers (CIOs) are under immense pressure to effectively respond to issues such as inflation, workforce scarcity, and their local implications. These conditions compel CIOs to develop appropriate service delivery mechanisms and increase organizational accountability.
In addition, governments are contending with the effects of the “great resignation” and the intense competition for qualified professionals from the private sector. As a result, they are reevaluating their strategies to combat internal talent shortages and adapt to the evolving labor market dynamics.
To resolve these obstacles, government organizations are investing heavily in digital programs. 57% of government CIOs plan to allocate more funds to application modernization in 2023, up from 42% in 2022, according to the 2023 CIO and Technology Executive Survey conducted by Gartner. This emphasis on modernizing legacy applications demonstrates the determination of governments to capitalize on the advantages of digital transformation.
In addition to modernizing their systems, government institutions are increasingly incorporating digital metrics that are directly related to their public purpose or mission. Gartner predicts that by 2026, over 75 percent of governments will evaluate the success of their digital transformation initiatives based on the mission they serve.
SaaS , LCAPs, Retaining IT Talent
When analyzing government IT expenditure segments in 2023, software is anticipated to experience the greatest growth. This forecast is consistent with the ongoing trend of replacing obsolete applications with software-as-a-service (SaaS) alternatives. Also gathering momentum is the adoption of low-code application platforms (LCAPs), which facilitate the rapid modernization of legacy systems
Governments face challenges in attracting and retaining IT talent due to compensation constraints and limited resources, despite the rising investment in IT services. Some government agencies are employing a multisourced workforce strategy in response. This strategy entails optimizing the use of internal IT talent, investing in employee experience tools to stimulate innovation, and collaborating with external IT service providers to accelerate the delivery of value.
In 2023, improving access to digital services will also be a major focus for governments. As constituents expect increasingly seamless online experiences comparable to those offered by the private sector, government organizations are investing in initiatives that improve the accessibility of digital services.
While digital transformation continues to be a top priority for governments, some CIOs admit that they have yet to realize the full potential of their digital investments. Kaushik emphasizes that government CIOs are endeavoring to ensure that future investments directly contribute to achieving their organization’s mission or public purpose, as opposed to merely scaling digital solutions.
The reports ‘Predicts 2023: Governments Increase Focus on Mission Impact Amid Global Uncertainties’ and ‘Forecast: Enterprise IT Spending for the Government and Education Markets, Worldwide, 2020-2026, 1Q23 Update’ provide Gartner clients with additional information and insights on these trends. In addition, Gartner provides a free ebook titled ‘Top Technology Trends 2023: Government’ that examines the key government trends that will influence strategic decision-making in the coming years.