# GovTech is changing: from technology procurement to public value investments — Deloitte Ukraine & GGTC Kyiv Report

As the global IT market continues to grow, the focus is increasingly shifting toward software, IT services, cloud platforms, and artificial intelligence solutions. This raises an important question: what does this shift mean for the GovTech sector? The answer lies in the evolving logic of GovTech investments, as outlined in the GovTech Investment Trends: An Overview report prepared by Deloitte Ukraine and the Global Government Technology Centre Kyiv.

In 2025, global IT spending has reached USD 5.54 trillion, representing a 10% year-on-year increase compared to 2024. Europe accounts for approximately USD 1.29 trillion, marking an 11.5% increase compared to 2024. The fastest-growing segments include software, IT services, and data center infrastructure, while growth in hardware spending remains moderate. This shift reflects a broader transformation in investment priorities: whereas infrastructure previously dominated IT budgets, today investment flows are increasingly directed toward model-integrating platforms, cloud services, analytics, and data protection — the technological foundation underpinning modern GovTech solutions.


# The public sector as a major driver of the global IT market

According to Gartner, the global government IT spending has exceeded USD 606 billion in 2025. The largest share of this spending — 39% — is allocated to services, including consulting, application and infrastructure implementation and management, Infrastructure as a Service (IaaS), and business process services. This indicates that governments are increasingly prioritizing integrated services and partnerships, alongside their more traditional purchasing of servers, related equipment, and licences. For the GovTech sector, this translates into a growing demand for solutions that support service integration, interoperability, managed operations, and scalable cloud-based architectures.


# Government IT budgets are shifting toward IaaS and PaaS


## Cloud and AI as the underlying infrastructure of the digital state

Cloud computing and artificial intelligence are increasingly viewed not as standalone technologies, but as core infrastructure of the digital state. According to Gartner data referenced in the report, spending on public cloud services more than doubled over four years — from USD 332 billion in 2021 to USD 723.4 billion in 2025.Even faster growth is observed in AI investments. Global spending on AI solutions increased from approximately USD 342 billion in 2021 to around USD 1.48 trillion in 2025, with projections exceeding USD 2 trillion in 2026. A Gartner survey conducted in 2025 shows that 62% of executives view AI as the key competitive differentiator over the next decade, while the public sector ranks among the fastest-growing adopters of AI and cloud technologies.


# Cyber resilience as a prerequisite for sustainable GovTech development

The report emphasizes that investments in digital infrastructure without adequate cybersecurity measures can turn into a source of systemic risk rather than resilience. Global losses from cybercrime are estimated at USD 9.5 trillion in 2024 and are expected to rise to USD 10.5 trillion in 2025, underscoring the growing economic impact of cyber threats. At the same time, audits in several advanced economies reveal a persistent “modernization gap,” where critical legacy systems remain underfunded and vulnerable despite increasing cyber budgets. The spread of AI-tools will further amplify risks by making attacks cheaper and more scalable, turning cyber resilience into a foundational requirement for sustainable GovTech development.


## From siloed solutions to Digital Public Infrastructure

Fragmented GovTech development often leads to the creation of parallel systems and duplicated investments. When digital solutions are designed and implemented in silos — without coordination across institutions — governments risk developing overlapping registries, platforms, and e-services. This results in higher long-term maintenance costs, data incompatibility, limited scalability, and, ultimately, dilution of public resources.To address these risks, international institutions, including the World Bank, increasingly promote the Digital Public Infrastructure (DPI) approach. DPI focuses on the development and reuse of shared, interoperable “digital building blocks” — such as digital identity, payment systems, core registries, and data exchange layers — that can be applied across sectors and services, rather than building new platforms from scratch for each policy area. This approach also enables countries to adopt open-source or modular solutions, lowering entry barriers and increasing flexibility in the context of rapidly evolving technologies, including artificial intelligence.Importantly, the transition to Digital Public Infrastructure is primarily an institutional and political decision. Successful implementation requires clearly defined roles and mandates, coordinated governance models, and an appropriate organizational architecture to manage shared digital assets across government.


## Assessing public value and economic impact as pillars of GovTech investment

A central conclusion of the Deloitte Ukraine–GGTC Kyiv report on GovTech investment trends is that investments in digital solutions are increasingly evaluated by their measurable impact on outcomes that matter to society and the state. Governments, donors, and international partners are progressively shifting from viewing digitalization as a cost center toward treating it as a strategic investment with demonstrable returns.The report analyzes how GovTech investments influence key dimensions of public value, including productivity gains, resource efficiency, service quality, system resilience, sustainability, and public trust. This assessment logic emphasizes the importance of evidence-based decision-making throughout the entire investment lifecycle — from defining expected effects and benchmarks before implementation to measuring actual outcomes after deployment.Explore the full report at the link.