Gartner Forecasts Worldwide Government IT Spending to Grow 6.8% in 2023

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Modernization of Legacy Systems and Improving Access to Critical Services Will be the Top Drivers of Government IT Spending

DUBAI, UAE: Worldwide government IT spending is forecast to total $588.9 billion in 2023, an increase of 6.8% from 2022, according to Gartner, Inc.

“Government organizations are continuing to modernize legacy IT and invest in initiatives that improve access to digital services as constituents increasingly demand experiences that are equivalent to online customer interactions in the private sector,” said Daniel Snyder, Director Analyst at Gartner. “The total experience (TX) framework, which helps agencies manage employee and citizen interactions, is enabling transformation and will remain among the main drivers of IT spend in 2023.”

Along with improving the citizen experience and engagement, a cohesive TX strategy will help governments advance digital skills and literacy in their workforces by providing modern tools and approaches to  lessen friction in government work. Failing to build a solid TX strategy increases service friction, leading to risk of service delays and underwhelming service experiences.

In 2023, government IT spending is forecast to increase across all segments except devices, as government end-users extend the useful life of their devices that were acquired at the onset of the pandemic (see Table 1). Software will be the highest growing segment in 2023 followed by IT services and internal services.

Table 1. Worldwide Government IT Spending Forecast(Millions of U.S. Dollars)

  2021 Spending 2021 Growth (%) 2022 Spending 2022 Growth (%) 2023 Spending 2023 Growth (%)
Data Center Systems 23,110 7.0 25,042 8.4 25,156 0.5
Devices 37,520 11.6 34,794 -7.3 34,667 -0.4
Internal Services 68,469 -1.9 67,119 -2.0 68,602 2.2
IT Services 185,564 10.8 193,925 4.5 209,261 7.9
Software 148,962 16.2 162,803 9.3 183,103 12.5
Telecom Services 71,757 1.4 67,775 -5.5 68,209 0.6
Total 535,382 8.9 551,458 3.0 588,998 6.8

Source: Gartner (December 2022)

Initiatives such as migrating services to the cloud, modernizing applications, and fortifying network security are among the primary innovation priorities that governments are focused on to improve public engagement and satisfaction.

Government CIOs Will Prioritize Improved Use of Data and Digitalization Across Organizations

According to the 2023 Gartner CIO and Technology Executive Survey, digital transformation, leveraging and using data effectively and technology modernization are the top three priorities of government CIOs.

“Delivering on these priorities depends on establishing a shared, organization-wide digital vision and integrating that vision into enterprise-level strategies,” said Apeksha Kaushik, Principal Analyst at Gartner. “In alignment to these priorities, investments will increase in cybersecurity, application modernization, cloud platforms, integration technologies such as artificial intelligence (AI) and machine learning (ML), and business/data analytics tools.”

At the same time, CIOs will have to tackle challenges such as varying stakeholder expectations and developing action plans accordingly. “Government CIOs will need to address concerns of digital transformation with mission objectives. They need to work closely with government executives to ensure a shared understanding of vision, roadmap and linkage to mission critical priorities,” added Kaushik.

Gartner clients can read more in “Forecast: Enterprise IT Spending for the Government and Education Markets, Worldwide, 2020-2026, 3Q22 Update.”

Learn more about the trends that make the biggest impact in government in the Gartner roadmap for digital government strategy.

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