Governments opt for XaaS, dump datacenters in droves

Outsource all the things! To whom? The lowest bidder of course, says Gartner


The world's governments are eager to let someone else handle their IT headaches, according to a recent Gartner report, which found a healthy appetite for "anything-as-a-service" (XaaS) platforms to cut the costs of bureaucracy.

These trends will push government IT spending to $565 billion in 2022, up 5 percent from last year, the analyst house claims. Gartner believes the majority of new government IT investments will be on service platforms by 2026.

"The pandemic sped up public-sector adoption of cloud solutions and the XaaS model for accelerated legacy modernization and new service implementations," Gartner analyst Daniel Snyder said in a release. "Fifty-four percent of government CIOs responding to the 2022 Gartner CIO survey indicated that they expect to allocate additional funding to cloud platforms in 2022, while 35 percent will decrease investments in legacy infrastructure and datacenter technologies."

This was borne out in the report, which projected datacenter spending in the public sector would grow 4.2 percent year over year in 2022 to $26 billion. That's down from the 7.3 percent growth Gartner recorded in 2021.

Some of this can be chalked up to robust post-pandemic spending last year, but Gartner expects datacenter investments will continue to slow to 1.9 percent in 2023, as government agencies pivot to cloud and software-as-a-service platforms at increased pace.

As-a-service platforms offer government agencies a reprieve from talent shortages as they often place less demand on the organization to develop or acquire new IT skills, according to the research firm.

In line with this, Gartner forecasts double-digit growth in software spending over the next year and a half, with public sector investments in the segment projected to reach $162 billion in 2022, up 10.4 percent from 2021, and rising a further 12.8 percent the following year.

Despite the pivot to software-as-service and cloud platforms, government demand for IT services remains strong. The report projects government agencies will spend roughly $204 billion on IT services this year, up 6.5 percent from 2021. What's more, services spend is only expected to increase headed into 2023, with the analyst firm predicting 8.2 percent growth.

Meanwhile, Gartner says government demand for telecom, internal services, and devices will slow or decline in 2022, as agencies phase out legacy systems in favor of digital ones.

However, the research firm warns that the unpredictability of COVID-19 variants and uncertain economic and supply chain challenges could impact government IT spending forecasts. ®

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