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Government tech market set to weather economic storm, says Gartner

The global government technology market will prove more resilient than the wider enterprise IT sector in the months ahead, according to a new forecast from Gartner.

The analyst house has predicted that the global IT market – of which government spending represents 16 per cent – will contract by 8 per cent to $2.7tn over the course of the year.

But Gartner’s analysts are more optimistic about the government tech market, which is expected to shrink by just 0.6 per cent over the same period.

Gartner’s forecast indicates that two government tech segments – IT services and software – are set to experience growth in 2020. While the former is predicted to grow by less than 0.01 per cent, the latter’s market size is forecast to increase by 4.4 per cent.

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

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

Fabular added: “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.”

One area that is expected to attract significant tech investment in the months ahead is national resilience, in particular disease and threat surveillance systems, says Fabular. Most countries are investing in some kind of contact-tracing technology.

On the other hand, “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,” says Fabular. “Adoption of cloud services will continue to accelerate while spending on in-house servers and storage will continue to decline.”

Simon Hansford, the CEO of UKCloud, a provider of cloud computing services to the public sector, backed up Gartner’s analysis. “I do broadly agree that globally, the government IT market will be more resilient in the face of economic pressure,” he told NS Tech.

“I believe this will be particularly the case in the UK given the government’s commitment to optimising its use of data, its need to tackle the challenges of its legacy IT estate and in particular, its indication that the forthcoming digital strategy will set out a technology led road to recovery.”

But how long will the market hold up?

Rob Anderson, principal central government analyst at GlobalData, which is part of the same group as NS Tech, said that UK procurement data supported Gartner’s assertion that the government tech market showed a higher degree of resilience than the wider IT sector.

Although the number of tech procurement opportunities has fallen, total government tech spend was up between the start of December and the end of July, once frameworks – which Anderson described as “fanciful estimates of future spend” – are discounted.

According to data obtained from the government’s Contracts Finder site, total government ICT spend increased from £2.34bn to £3.05bn over the eight-month period.

But Anderson said the market’s resilience may not last forever. “There will have been products and services procured in direct response to COVID-19 which may have skewed the figures, and as we emerge from the crisis, I expect spending will fall in the second half of the year – possibly quite dramatically depending on the outcome of the Comprehensive Spending Review (though that is likely to have more of an impact next year).”