MSP government opportunities

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Recent Gartner research forecasts that, with about one-third of Australian government spending to be dedicated to IT services, MSPs have a strong year of opportunity ahead in the sector.

Overall spending will reach AUD$17 billion in 2023, which is an 8.4% increase from the previous year. This is slower than the increase in spending in 2022 (9.4 %) but higher than the global growth in government spending (7.6% to US$589.8 billion).

Furthermore, of that $17 billion, around $6.5 billion will be committed to IT services. That’s a growth of 6.6%. This growth in IT services, along with data centre systems (6.6 %) and software (14%), represents the areas where spending will increase the most.

For MSP businesses, however, the reasons for this spending are the most encouraging. According to Dean Lacheca, VP research analyst for the public sector and government at Gartner, the chief drivers of spending will be ongoing economic disruption and inflation pressures across Australia. This will convince agencies to focus on leveraging technology to find efficiencies at both the state and federal levels.

For example, over half of Australian government CIOs are expected to spend more on application modernisation this year (57%, up from 42% last year). Additionally, agencies will look to automation to drive efficiency opportunities and improve service delivery.

The Government Is Grappling with a Skills Shortage

As with the private sector, government agencies are also struggling to attract and retain skilled IT workers due to a massive skills shortage. Last year, the government added 10 further IT occupations to its shortage list. The cybersecurity sector alone will require another 16,600 workers in technical and non-technical positions by 2026.

These trends will drive government agencies to engage deeply with MSPs to fill the skills gap, even as they continue to modernise and transform with a focus on customer experience.