Smart Government Market size is assessed at USD 41.2 billion in 2024 and is likely to exceed USD 391.8 billion by the end of 2037, registering over 18.9% CAGR during the forecast period i.e., between 2025-2037. In 2025, the industry size of smart government is evaluated at USD 48.9 billion.
The burgeoning market for smart government solutions is attributed to a rapid rate of digitization. Innovations in internet of things (IoT), artificial intelligence (AI), and cloud computing have facilitated streamlining government operations, propelling the growth of the market.
The United Nations has an E-Government Development Index (EGDI) for all its member states. The E-Government Index assesses the incorporation of infrastructure technology for better service to people. In 2024, the 13th edition of the UN E-Government survey was released showing an upward trend in the development of digital government globally and improvement in the global average value of the EGDI, with population lagging in digital government reducing from 45% in 2022 to 22.4% in the current year. The trends indicate for the robust growth of smart government market.
The shift towards data-centric government is encouraging substantial investments in smart government solutions from both government and service providers accelerating the market’s growth. Smart government solutions can foster a responsive and citizen-centric approach to governance. For instance, the government in India launched the Aarogya Setu app in 2020 during the COVID-19 pandemic for self-assessment and contact tracing digital service. The government application became the fastest growing app globally after its release. As the penetration of 5G services continue to improve, the smart government services are poised to be disseminated to larger section of people.
Growth Drivers
Challenges
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
18.9% |
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Base Year Market Size (2024) |
USD 41.2 billion |
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Forecast Year Market Size (2037) |
USD 391.8 billion |
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Regional Scope |
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Component (Solution, Analytics, Service)
Solution segment is projected to dominate smart government market share of around 60.6% by the end of 2037, owing to rapid improvement in AI, IoT, and 5G technologies. The segment is characterized by diverse set of offerings that enable governments to provide efficient and citizen-centric services. The rising demand for citizen engagement platform boosts the growth of the component segment.
Citizen engagement platforms such as e-government services, digital voting platforms, feedback tools, apps, etc., witness a high rate of participation enabling the growth of the segment. For instance, the Christchurch Council in New Zealand has a Snap Send Solve app where users reported over 48000 local issues in 2019. The diverse offerings in the segment open new revenue streams for the service providers.
The analytics segment is poised to increase its revenue share during the forecast period due to greater demand for data-driven decisions (DDD) and formulating citizen-friendly policies. Due to the growing number of public sector organizations processing large amounts of data for better service delivery, smart service providers for advanced AI-driven analytics tools are witnessing a steady boost in revenue. For instance, in 2024, NITI Aayog in India launched the National Data & Analytics Platform (NDAP) that allows merger of datasets and make cross-sectoral analysis easier to provide data-driven solutions to the public.
Deployment (Cloud, On-Premise)
The cloud segment in smart government market is estimated to significantly increase its revenue share by the end if 2037. The segment’s growth is attributed to increasing adoption of cloud-based solutions by the public sector to improve service delivery and optimize operations. Governments require secure cloud-based solutions to store large amounts of data.
The increase in investments to modernize IT infrastructures by governments is attributed to the rapid growth of the segment. For instance, in 2021, Amazon Web Services became the official cloud platform of the Digital Agency of Japan for regional and public government. In 2022, the Digital Agency of Japan subscribed to cloud services from Microsoft and Oracle Corporation. Major cloud services platform like Oracle, Amazon Web Services, and Google Cloud offer dedicated government cloud infrastructure to maintain robust security.
Our in-depth analysis of the global market includes the following segments
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Component |
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Deployment |
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North America Market Analysis
North America in smart government market is anticipated to dominate over 37.6% revenue share by 2037. The rapid rise of the market in the region is attributed to government investments in digital infrastructure to provide smart government services to the public. In Canada and U.S., there has been greater investments in AI, data analytics, and cloud services to improve ease of service delivery. In 2024, the United Nations released the E-Government Developmental Index (EGDI) report where U.S. ranked at 19 in EGDI and Canada ranked at 47.
U.S. is the leading market for smart government solutions in North America. In 2024, U.S. was ranked at 11th out of 193 countries in the E-Participation index by UN. The high-rate of citizen participation bodes well for the market growth in U.S. In March 2023, the Department of Defense (DOD) awarded contracts to four service providers i.e., Amazon Web Services Inc., Google Support Services LLC, Oracle, and Microsoft Corporation, in support of its Joint Warfighting Cloud Capability.
Additionally, the government invests heavily on smart government systems to improve citizen convenience opening up opportunities for smart service providers to partner with the public sector. For instance, in 2023, the U.S. Department of Transportation (USDOT) announced that USD 500 million will be granted via SMART Grants Program to invest in smart systems improving transportation efficiency.
Canada holds a major share in the smart government market in North America. In 2024, Canada was ranked at 15 out of 193 countries in the E-Participation index by the UN. Federal and provincial governments in Canada are rapidly integrating smart government solutions to improve service efficiency to the public. In 2023, the government of Canada organized smart cities challenge for all municipalities, local or regional governments, and indigenous communities to encourage smart government solutions at grassroot levels. Additionally, large-scale government investments in projects such as Smart Grid enables the rapid growth of the market in Canada.
APAC Market Analysis
Asia Pacific is poised to increase its revenue share by a significant amount during the forecast period. The rapid growth of the smart government market is due to large scale digitization drives in emerging economies such as China and India. The large-scale population in many APAC countries also boosts the drive to inculcate smart government solutions. India, Singapore, Japan, and China have national smart portals for citizen registry. Key market players are poised to find greater revenue streams in the region as public sectors in various levels of the government collaborate with private sectors to deliver smart government solutions to the public.
In India, the market is estimated to have major growth spurt during the forecast period owing to large-scale digitization drive by the government. For instance, in 2024, Invest India announced the Digital India initiative, which was extended to 2025-2026, and the budget allocated was USD 178.6 million. Government backed applications such as the Indian Railway Catering and Tourism Corporation provide smart ticketing, catering, and touring solutions to citizens, and vendors such as Haldiram, Dominos, Relfood deliver food via the IRCTC application. As 5G services penetrate more in India, the access of smart government solutions will improve. Additionally, government drive of creating smart cities ensures smart government solutions to reach local governments enabling the robust market growth.
China is poised to rapidly increase its market share during the forecast period and become a leading player in the smart government market. The Digital China strategy of the government is reaping dividends as the government is able to deploy AI, big data, and cloud computing services rapidly to improve public administration. Local market players in China are leveraging the push for smart government solutions. For instance, the Alibaba Group designed the City Brain software system that utilizes AI for efficient urban management. In 2019, Alibaba announced that City Brain system is now used in 22 Chinese cities in an effort to make cities smarter. As the 14th 5-year plan of China drives public sectors to accommodate smart government solutions, the market is set for a considerable boost by the end of 2037.
The smart government market is projected to have a strong growth curve during the forecast period. The sector has global and local players vying to attain government contracts and provide smart government solutions to leverage the rising push for digitization globally. Key market players are investing in providing secure cloud solutions amongst other services to the public sector to increase their market share.
Some of the key players in the market are:
Author Credits: Abhishek Verma
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