Government Cloud Market Size, Share & Trends Analysis Report By Deployment Model (Public Cloud, Private Cloud, Hybrid Cloud), By Delivery Mode (Infrastructure-as-a-Service, Platform-as-a-Service, Software-as-a-Service), By Application (Server & Storage, Disaster Recovery/Data Backup, Security & Compliance, Analytics, Content Management) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global government cloud market was valued at USD 37.21 billion in 2023. It is expected to reach USD 161.92 billion in 2032, growing at a CAGR of 17.75% over the forecast period (2024-2032). Government agencies often deal with sensitive data that requires high levels of security and regulatory compliance. Cloud providers offer robust security measures and compliance certifications (such as FedRAMP in the US) that meet government standards, thereby facilitating secure data management and storage.

The term "government cloud" refers to cloud computing and virtualization systems designed specifically for government agencies. This global program aims to identify and develop cloud solutions that support the global federal governments' operational, strategic, and financial goals as well as their IT requirements. Using the cloud's capabilities enables the government to create services and applications for citizens more swiftly and flexibly. To improve security, agencies can use cloud-native security services. They can also update and secure their deployment while achieving higher resilience due to cloud-native auto-scaling features. The government cloud is creating itself in numerous nations following their respective federal and municipal laws, rules, and strategies.

The government cloud helps the government by giving it information on strategic change, producing documentation, setting up tailored backup settings, and building teams to focus on specific products without managing the underlying server infrastructure. Utilizing government cloud services has many benefits, including flexibility, security, compliance, improved cost-effectiveness, increased reliability, and greater scalability. It is currently offered in various delivery models, including software as a service, platform as a service, and infrastructure as a service. One of the main reasons influencing the government cloud market expansion is its widespread usage across various industrial sectors for accessing the excessive amounts of citizen data regarding user logs, policies, and systems from distant endpoints.

Market Dynamics

Market Driving Factors

Requirement for More Storage Capacity

Globally, digital data in all forms continues to increase significantly. The ability to stimulate innovation and make provisions for the wellbeing and happiness of their inhabitants is being challenged by the need for governments worldwide to manage such data appropriately. Global Datasphere predicts that by 2025, the total digital data will be 175 zettabytes. The government sector is producing data exponentially, driving demand for cloud-based storage to handle the massive amounts of data. Since the cloud is easily scalable, expanding it to accommodate quickly growing data is simple.

Storage administrators are advancing beyond outmoded storage technology and isolated point solutions to manage storage challenges and workloads in a way that aids the government workforce in deriving meaningful insights from data as government data continues to expand exponentially. Adoption of cloud storage solutions can help with this. Additionally, there are considerable cost benefits to cloud data storage. Further, the need for data storage devices is rising as the number of digital devices rises. Players in the cloud solutions market are currently compelled to develop inexpensive ways to store and handle the data due to the volume of data produced. The government cloud market will grow due to these factors in the future.

Market Restraining Factors

Security Concerns with Cloud-based Solutions

Although the use of cloud-based solutions has grown significantly over the past several years, there are currently no adequate security measures to safeguard customers' data and apps. Cloud-based solutions pose numerous security problems and difficulties. Limited visibility exists for data kept in the cloud using a third-party service, and no control because the supplier has access to the data. Although most governmental organizations continue to store client information on their premises, they nevertheless require a connection to the cloud service provider to accomplish specific functions like screen pops and data lookup. Government organizations, particularly in emerging nations, are still hesitant to adopt these solutions due to the related hazards that limit market growth.

Key Market Opportunities

Growing Implementation of IoT

A sizable customer base is being created for participants in the government cloud market due to the acceleration in the internet of things (IoT) deployment. To link various devices, IoT implementation needs cloud-based technologies, which can be offered by public, private, or hybrid models. IoT investments and, consequently, cloud spending will be significant in the years to come due to remarkable technological advancements. The government sector is beginning to understand how crucial IoT is for thorough analyses and obtaining meaningful information from such analyses. Additionally, the government cloud market is offering new entrants and start-ups a significant opportunity for growth due to the rapidly changing technical landscape.

Regional Analysis

North America Acquires Maximum Market Share

By region, the global government cloud market includes North America, Europe, Asia-Pacific, and LAMEA.

North America will command the leading market share, expanding at a CAGR of 16.6% over the forecast period. Due to numerous firms that provide government cloud solutions and services in this region, North America is the most promising potential market. The government cloud market is most developed in North America, where most major corporations are based. The most crucial federal cloud security frameworks are NIST's Cybersecurity Framework (CSF) and FedRAMP's Federal Risk and Authorization Management Program (FRAMP). One of the strictest security compliance frameworks used by the federal government is FedRAMP. It permits the federal government to hasten the use of cloud computing by developing open standards and procedures for security authorizations. FedRAMP gives federal agencies using cloud products and services a standardized method for security evaluation, authorization, and ongoing monitoring. As a result, there is a growth in demand for cloud services, particularly in government bodies.

Europe is expected to generate USD 25 billion by 2030, growing at a CAGR of 17.45%. The present cloud computing policy in Europe is based on the 2012 strategy established by the European Commission. The goal of the strategy was to accelerate and broaden the usage of cloud computing in all spheres of the economy. Creating a European Cloud Partnership was one of the strategy's action items (ECP). The Cloud-for-Europe (C4E) initiative, a component of the ECP, aims to assist European public bodies in acquiring cloud goods and services to increase trust in European cloud computing. Government organizations in the region have recognized the value of using the government cloud as a practical way to accomplish effective and efficient operations and guarantee seamless business continuity. The European Union plans to invest EUR 10 billion over the next seven years to create a domestic cloud computing market that could compete with multinational companies like Amazon, Google, and Alibaba. These factors will boost the government cloud market during the forecast period.

Segmental Analysis

The global government cloud market is classified based on deployment model, delivery mode, application, and region.

On the Basis of Deployment Model

By deployment model, the global government cloud market comprises Public, Private, and Hybrid Clouds.

The Public Cloud section is projected to advance at a CAGR of 17.9% and hold the largest market share over the forecast period. Users can store and analyze their data on the public cloud and other resource-sharing features to achieve economies of scale in other people's data centers. Public cloud platforms allow customers to access the same services without worrying about managing and storing their data. These help firms save on the potentially high expenses of buying, running, and maintaining on-premises software. The typical delivery method for these cloud services is an automated web route free from human involvement.

The Hybrid Cloud section will hold the second-largest market share. An agency's network-accessible private and public clouds are combined to form a hybrid cloud (accessible to the public). Due to the security dangers, government agencies were previously wary of using the public cloud; nevertheless, many organizations are now accepting the safe hybrid cloud approach. The government has hesitated to entrust sensitive or essential systems to the public cloud. However, according to IBM, the hybrid cloud model offers agencies a way to select a service based on data and security concerns.

On the Basis of Delivery Mode

By delivery mode, the global government cloud market comprises Infrastructure-as-a-Service, Platform-as-a-Service, and Software-as-a-Service.

The Software-as-a-Service section is projected to advance at a CAGR of 17.2% and hold the largest market share over the forecast period. Software that can be accessed online through a web browser instead of having to be bought and deployed on individual computers is known as software-as-a-service (SaaS). SaaS is one aspect of cloud technology that is experiencing rapid expansion. SaaS-based software and services are frequently utilized in hybrid settings to integrate with on-premises and cloud models. When workable solutions are already available in the cloud, government agencies no longer need to develop their own. Adopting AI and other new technologies in government may expand with the use of SaaS solutions that incorporate cognitive technologies into the software.

The Infrastructure-as-a-Service (IaaS) section will hold the second-largest market share. Due to its ability to run on any platform or application, IaaS is regarded as the layer with the most significant degree of freedom among the other cloud layers. IaaS's expansion can be attributed to its capacity to move workloads to the cloud when demand for on-premises systems is at its highest. Instant computing infrastructure that is deployed and controlled online is known as infrastructure as a service. Some of the critical components of IaaS include analytics, web apps, high-performance computing, test and development, and website hosting.

On the Basis of Application

By application, the global government cloud market comprises Server & Storage, Disaster Recovery/Data Backup, Security & Compliance, Analytics, and Content Management.

The Servers & Storage section is projected to advance at a CAGR of 17.5% and hold the largest market share over the forecast period. Cloud servers offer scalability, cost-effectiveness, and diverse operations and procedures integration. The term "cloud server" refers to a virtual server rather than a physical server that is constructed, hosted, and provided by a cloud computing platform over the internet and accessible from a distance. Governments are moving their computing requirements to cloud infrastructure at all levels, including the federal, state, and municipal. Many governments are attempting to implement hybrid, multi-cloud environments that offer agility and security. The user records, public policies, and programs held by the federal and state governments contain vast data. Therefore, having a trustworthy and durable storage solution is essential for the government to deliver all services on demand.

The Security & Compliance section will hold the second-largest market share. Government organizations are subject to stringent cloud computing rules and security specifications, so cybersecurity is a significant worry for them. Solutions from businesses like Intel assist corporations and government bodies in implementing measures that correspond to cloud compliance. Additionally, the apps that these organizations rely on are moving to the cloud to meet the demands of the constantly growing workloads due to the pandemic and the growing trend of remote working conditions among government firms. Agencies and companies' old security perimeters are becoming obsolete, raising demand for cloud-based servers and security choices.

Impact of covid-19

COVID-19 has positive and negative market consequences, as carbon emissions have decreased globally due to the lockout. COVID-19's reduction in emissions is a short-term benefit. Still, when industries and enterprises attempt to recoup some of their financial losses in the first quarter of the year, carbon emissions will rise dramatically. COVID-19 had a negative impact on global recycling efforts. Countries, notably the United States, have halted or decreased recycling programs to focus on collecting additional domestic waste or because services have been disrupted by the virus.

Also, with industries slowly returning to normalcy following the COVID-19 outbreak, this shift in workplace health and safety is expected to increase due to mandatory social distancing and continuous personal care through sanitization to eliminate even the tiniest possibility of COVID-19 spread. COVID-19 has impacted various companies' revenues, and if the lockdown is lifted, companies will turn their attention to operations to make up for their losses.

Recent Developments

• June 2024 - Salesforce declared the opening of its Public Sector division in India with the goal of enabling public sector and government organizations to use Salesforce technology to revolutionize citizen experiences. Salesforce Public Sector Solutions offers out-of-the-box software for digital service delivery, enabling government organizations to serve citizens more quickly.
• April 2024 - In order to assist with sovereign AI, Oracle announced that NVIDIA AI Enterprise on Oracle Cloud Infrastructure Supercluster will be available in the Oracle U.S. Government Cloud area. With access to Oracle Cloud Infrastructure's 100+ services, including its generative AI services running on high-performance accelerators like NVIDIA H100 and NVIDIA A100 Tensor Core GPUs, as well as ultra-low-latency networking and secure storage, Oracle and NVIDIA are assisting U.S. government customers in training and deploying AI solutions, building on the expansion of their partnership.