Government IT spend to slump

Australian government IT spending is set to slump in 2020, according to research firm Gartner in its latest forecast of worldwide public sector tech outlays.

This year’s expected 7.6% drop across state and Federal governments follows a slight downturn in 2019, which saw spending fall 0.69% across the 12 months.

Reduced device purchases are the main driver of the falls, with Gartner expecting governments to spend 20.5% less on equipment, along with an 18.1% drop in data centre spending and 12.1% in telco payments.

Services are also expected to take a substantial hit with overall IT Services spend estimated to fall 9.1% and agencies’ internal services spending slumping 9.2%.

The drop in Australian public sector IT spending comes despite the Federal government committing to spend $1.35b in cybersecurity over the next five years.

Australian Government IT Spending Forecast by Segment, 2019-2021 (Millions of AU Dollars)

State and local governments are forecast to see the greatest falls in spending, Gartner claims, with overall IT outlays expected to be double the rate of the Federal declines.

Australian Government IT Spending Forecast, 2019-2021 (Millions of AU Dollars)

The Australian government IT sector will take a greater hit than overseas counterparts, says Gartner with the firm estimating global government spending decreasing 0.6% to a total of US$438 billion in 2020.

The only segments to show growth internationally will be IT services and software.

Government IT Spending Forecast by Segment, 2019-2021, Worldwide (Millions of U.S. Dollars)

^{Source: Gartner (August 2020)}

The following year should be a happier time for government IT vendors, Gartner believes.

In Australia, 2021 spend should bounce back 5.8% while global expenditures should rise 3.3%.

“Government organisations are accelerating IT spending on digital public services, public health, social services, education, and workforce reskilling in support of individuals, families and businesses that are heavily impacted by the COVID-19 pandemic,” said Irma Fabular, senior research director at Gartner.

“To sustain economic viability, government organisations also deployed government recovery assistance programs which assist small businesses and allow workforce reskilling.

“As government organisations globally begin to ease stay-at-home policies, some practices relevant to public health and wellness will persist, including options for telecommuting,” continued Fabular.

“Many government organisations will also introduce measures to build community and national resilience, including improving disease and other threat surveillance systems. An example is the $500 million in aid designated by the US federal government in public health data surveillance and infrastructure modernisation to help states and local governments develop COVID-19 tools.

"Important but less urgent IT projects, such as enterprise resource planning (ERP) and robotics process automation (RPA), will be delayed to make room for immediate and critical spending in digital workplace support, public health response and economic growth. Adoption of cloud services will continue to accelerate while spending on in-house servers and storage will continue to decline.”