8% Growth in IT Spending by Governments Expected in 2023

IT spending will reach $589.8 billion in 2023, representing a 7.6% increase from 2022. According to Gartner, the rise is attributed to various factors, including inflation, workforce scarcity, and the “great resignation”, prompting government CIOs to modify their strategies to tackle internal talent shortage. An increased commitment to digital initiatives is anticipated, with 57% of government CIOs planning to augment funding for application modernization in 2023, a significant rise from 42% in 2022. Moreover, over 75% of governments are expected to assess digital transformation success by 2026, considering its persistent mission impact. The highest spending segment will remain software, including software-as-a-service solutions and low-code application platforms (LCAPs), which will boost legacy modernization efforts.

Worldwide Government IT Spending Forecast

Segment2022 Spending2022 Growth (%)2023 Spending2023 Growth (%)
Data Center Systems25,76011.126,6233.3
Internal Services66,940-2.369,1783.3
IT Services191,9583.4209,1038.9
Telecom Services67,583-4.968,5141.4
In millions of dollars. (Source: Gartner)

In 2023, government organizations will invest in improving access to digital services, mirroring the standards expected by online customers, as digital transformation remains a high priority. However, some government CIOs have reported that they are not maximizing the benefits from their digital investments. Those pushing for greater scaling of digital solutions are ensuring future investment directly impacts their organization’s mission or public purpose.