Pace of government IT spending to slow in 2022

Investment in digital technologies will see global government IT expenditure rise by 6.5% between 2021 and 2022, with total spending expected to hit $557.3 billion (approximately £479 billion) next year.

IT infrastructure and applications modernisation, as well as digital government transformation, are the key areas that are set to fuel government IT spending in 2022, according to Gartner.

COVID-19 funding packages, too, will drive further investment in digital enablement, including support for sustainable growth, social programmes, education, cyber security and digital inclusion.

“Governments will continue to accelerate investments in digital technologies to respond and recover from the continuing evolution of public health uncertainties due to the COVID-19 pandemic,” said Irma Fabular, research vice president at Gartner.

“The disruptions caused by the pandemic have also reinforced a key digital government tenet, which is public policy and technology are inseparable.”

Although the total amount of government IT spending will reach new highs, the 6.5% increase represents a slowing down in the pace of growth, given that government IT spending rise by 9.5% between 2020 and 2021.

The rise between this year and next will mostly be driven by a 12% rise in software spending, from $135.6 to $151.9 billion (roughly £98.4 to £110.2 billion). Even this, however, is a slowdown from the 14.9% rise between 2020 and 2021.

The area expected to benefit from the most expenditure is IT services, with $203.9 billion (approximately £147.9 billion) spent in this area in 2022.

The only area in which the pace of change is set to be faster in 2022 than between 2020 and this year is internal services, which will increase in spending by 2.7% versus 0.3% last year.

Spending on telecoms services and devices will actually fall by 0.8% and 1.6% respectively between 2021 and 2022. This represents a massive turnaround for spending on devices, in particular, which rose by 17.6% between 2020 and 2021.

Despite the pace of spending falling slightly overall, these overall levels of expenditure still represents a massive commitment from governments across the world to digital transformation and the revamping of IT infrastructure.

The pandemic has served to boost the pace of digital transformation in the public sector, with Gartner estimating that by 2025, more than half of government agencies will have modernised critical core legacy applications.