How the skills gap is increasing Australian government spend on IT services

Australian government agencies are expected to spend more than $6 billion on IT services in 2021, and that spending will continue to grow in 2022.

The Australian government—federal, state, and local—is projected to spend $6 billion on IT services alone in 2021, with a 7.2% growth expected for 2022, or more than $6.4 billion, according to research firm Gartner. (Gartner does not include the education sector in its government spending forecast.)

IT services includes infrastructure as a service, managed services, implementation, and consulting costs. The spending growth on IT services isn’t the largest but the amount spent is. And some of the increase could, ironically, be connected to a lack of resources, including funding and digital skills.

Some of the increase is due to the acceleration of digital transformation and the concurrent move to the cloud. “As the adoption of cloud continues, it is not surprising to see more expenditure in this [IT services] space,” Gartner’s senior director government digital transformation and innovation, Dean Lacheca, told Computerworld Australia.

How the skills gap raises IT costs

But the widely accepted skills gap, which was exacerbated by borders closure during the COVID-19 pandemic, has raised salaries and increased the use of costlier consultants. “Resourcing and digital skills has been identified in our research as one of the barriers to digital transformation in governments around the world,” Lachecha said. He cited a recent Gartner report that found several main barriers to digital government programs, including siloed decision making (23%), insufficient funding (16%), insufficient IT-business resources (10%), and insufficient digital skills (7%).

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