Government IT spend in Australia to break $13B this year

The government sector is on track to be a good hunting ground this year for partners looking to boost business, with public sector spend in Australia forecast to exceed $13 billion in 2021, an increase of 6.2 per cent from 2020’s tally.

According to analyst firm Gartner, all IT segments are on pace to grow this year after declines in data centre and telecoms spending last year.

However, the software segment, including application, infrastructure and vertical-specific software, is expected to be a bright spot, experiencing the strongest growth in 2021 at 10.5 per cent, year-on-year.

The devices segment is also anticipated to see substantial growth, as government organisations continue to embrace remote work and connected public services. Spending on devices, including PCs and smartphones, is expected to grow again in 2021 following strong growth of 7.4 per cent in 2020.

Credit: Gartner

“Public health and safety measures, including vaccinating citizens, are the top concern for public sector organisations in Australia, pushing them to continue to accelerate their digital transformation,” Gartner executive programs vice president Brian Ferreira said. “Most technology spend is now linked to digital programs, for example, cybersecurity and digital identity programs.”

“We’re seeing the public sector changing IT operating models and innovating at a quicker pace by adopting commercially available technology solutions and software – particularly software as a service. Government budgets will continue to address recovery and growth needs of communities and businesses in 2021.  

“In addition, investments to address digital equity and access to remote government services will be prioritised,” he added.

Globally, IT spending in the public sector market is expected to increase by 5.1 per cent year-on-year, hitting US$483 billion in 2021.  

According to Irma Fabular, senior research director at Gartner, this investment surge is likely a result of ongoing complications being caused by the COVID-19 pandemic.  

However, while the pandemic has impacted many business segments negatively, tightening IT spend in some quarters, the government sector is digging deep to ensure its tech can handle the increased demands COVID-19 has put on public services.  

“Government organisations continue to be challenged with the appropriate level of interventions to respond and recover from the COVID-19 pandemic,” Fabular said. “Public health and safety measures, including vaccinating citizens are of paramount concern, which necessitate governments to continue to accelerate their digital transformation journey.”

Credit: Gartner

According to Gartner, three particular IT segments are expected to outpace the overall increase in government IT spend, with the software segment – including application, infrastructure and vertical-specific software – anticipated to experience the strongest growth this year.  

The IT services and devices segments are also expected to beat the overall government IT spend growth rate. Indeed, spending on devices is expected to grow 5.6 per cent in 2021, up from 1.6 per cent growth in 2020, as government organisations continue to embrace remote work and hyperconnected public services.

Moreover, it is expected that government budgets this year will continue to address recovery and growth needs of communities and businesses, while investments to address digital equity and access to remote government services will be prioritised.

“Governments are innovating at a quicker pace by adopting commercially available technology solutions for operational and mission critical needs,” Fabular said. “We are seeing innovative use of technology and data to control and respond to the pandemic, as well as provide financial and humanitarian assistance.

“The COVID-19 pandemic exposed weaknesses in the ability of government organisations to quickly respond, scale and secure essential services."

“Lessons learned from the responses by government organisations provide the impetus to increase resiliency and build for a stronger future for its citizens and businesses,” she added.