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Government IT spending is set for a major rise

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Worldwide government IT spending is set to rise to $565.7 billion in 2022, an increase of 5% from 2021 according to analyst house Gartner.

Software and IT services look particularly well equipped for growth, and are supposedly set to grow 10.4% and 5.5% respectively in 2022, fueled by the seemingly never ending demand for cloud hosting and collaboration tools.

Though Gartner predicts government IT spending is set to rise across the board, some segments, such as internal services and telecom services, are predicted to experience drops of 0.6% and -4.1% respectively.

How are governments spending?

Devices are one area that has seen a severe decline in spending growth, falling from 9.1% in 2021 to just 0.9% in 2022 according to analyst house. 

Overall revenue in this area fell from $37.48 billion in the Covid stricken days of 2021, where organizations where still rushing to find their workers laptops, to $37.39 billion in 2023. 

Data Center systems are another area which Gartner highlighted as being subject to slowing growth, which it attributed to governments prioritizing legacy modernization. 

Data Center systems spending growth was just 2.0% in 2021, rising from 25,085 to 26,137. 

Gartner predicts that spending in this area will begin declining, falling -0.6% in 2022 to $460 million. 

Spending on telecom services is another area which the analyst house believes is set for reduced growth, due to governments reducing spending on expensive legacy systems in favor of digital service delivery models. 

Spending on telecoms services rose 3.7 per cent in 2021, from 1,902 to 1,825. 

However, spending in is area is set to drop -4.1% to 1,831 in 2023 according Gartner’s predictions. In addition, the analyst house predicts the rise of Anything-as-a-Service (XaaS) across government organizations Gartner claims the popularity of this emerging approach dur to normalizing IT spend over time making budgeting for IT more predictable, which it claims will avoid 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 modernization and new service implementations,” said 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 center technologies.”

Will McCurdy

Will McCurdy has been writing about technology for over five years. He has a wide range of specialities including cybersecurity, fintech, cryptocurrencies, blockchain, cloud computing, payments, artificial intelligence, retail technology, and venture capital investment. He has previously written for AltFi, FStech, Retail Systems, and National Technology News and is an experienced podcast and webinar host, as well as an avid long-form feature writer.