Australia

IT market trends

Insights into Australia’s Information Technology Market

As Australia’s digital economy evolves at breakneck pace, organisations are navigating a rapidly disrupted IT landscape shaped by technological innovation, changing workforce expectations, and mounting economic pressures. IT spending in Australia is projected to reach AU$147 billion in 2025 – driven by a strong focus on reducing workforce inefficiencies and modernising legacy infrastructure.

The proliferation of AI, cloud computing, and automation is transforming businesses. However, these advantages also come with challenges, including growing cybersecurity threats, regulatory pressure, skills gaps, and sustainability demands.

national overview

Revenue from Australia’s IT services sector is projected to grow from AU$57.17 billion in 2025 to AU$70.26 billion by 2030. Following a whirlwind 2024 in which organisations navigated turbulent waters with caution, 2025 is emerging as a year for cutting-edge technology adoption.

AI Implementation

Generative and agentic AI use cases are gaining momentum, with 57% of organisations ramping up AI-related investments. While maturity levels vary, there is a shared recognition that AI will play an integral role in shaping the future of work. Employees who are enhancing their AI literacy or gaining hands-on experience with AI tools are increasingly in demand.

Cloud Computing Efforts at the Forefront

Organisations are making substantial investments to modernise legacy systems and transition to public cloud platforms such as AWS, Azure, and GCP. In fact, cloud-native platforms and Infrastructure-as-a-Service are expected to be among the most impactful technologies over the next two years.

Increased Focus on Cybersecurity

Cybersecurity remains a top boardroom priority, driven by high-profile data breaches and growing regulatory scrutiny. CIOs across Australia are increasing cybersecurity budgets by 33% in response to rising threats like AI-driven social engineering and deepfakes. With 64% of C-suite leaders acknowledging significant cyber risk exposure, the urgency to act is clear.

Skills Gaps and Talent Shortage

There is a widespread shortage of professionals with expertise in cybersecurity, cloud, AI/ML, and enterprise applications. These gaps are especially acute in government and regulated industries, where transformation programmes are being delayed due to a lack of available talent. In fact, nine out of ten organisations report a shortage of the talent needed for digital transformation.

Flexibility and Hybrid Models

While 44% of employers require employees on-site three to five days a week, flexibility and work-life balance remain top priorities for employees. Organisations offering hybrid models are better positioned to attract and retain top talent.

Value-Driven Service Models

Enterprises are increasingly shifting from traditional staffing models to outcome-based managed services. With IT services spend rising by 7.2% year-over-year in 2025, organisations are seeking structured delivery, strategic input, and operational oversight to support large-scale initiatives.

While this national snapshot offers a broad overview of Australia’s IT landscape, it is important to note that market dynamics can vary across states. The following sections delves deeper into localised trends, helping to identify specific challenges and opportunities that may influence strategic planning and resourcing decisions.

Australian Capital Territory (ACT)

Following the 2025 federal election, organisations are accelerating IT modernisation, cloud migration, and workforce reform while navigating talent shortages and evolving procurement models.

Election Impact and Government Continuity

The 2025 federal election caused temporary delays in project rollouts during the caretaker period. With continuity in the Federal Government, most departments are resuming initiatives and receiving renewed funding – especially for IT modernisation and regulatory compliance. This is expected to restore momentum across digital transformation programmes aligned with the ACT Digital Strategy.

IT Modernisation, Cloud Migration and Cybersecurity

Government departments are actively replacing legacy systems, adopting multi-cloud strategies, and aligning with ISM and PSPF frameworks to strengthen cybersecurity. There is a notable shortage of GCP and SAP S/4HANA expertise.

APS Workforce and Procurement Reform

There is a strategic push to reduce contractor reliance in favour of building permanent APS teams. Organisations are streamlining procurement by establishing vendor panels for time-and-materials and managed services, bypassing traditional processes. These reforms aim to improve delivery agility, retain IP, and ensure compliance and cost control.

Funding Policies and Insourcing

Federal departments are currently navigating a wave of detailed costing bids, which are shaping how digital and technology roles are funded and sourced. At the same time, a broader shift toward insourcing is gaining momentum, driven by government efforts to reduce reliance on external labour hire and rebuild internal APS capabilities.

Candidate Sentiment

Most organisations offer hybrid work arrangements, though some require full-time onsite presence, which can reduce candidate interest. As a result, there is growing scrutiny around the attractiveness and flexibility of roles during recruitment. 52% of employers in the ACT report having no minimum requirement for physical attendance. Along with flexible work options, remuneration and job stability remain top priorities for candidates.

Localised Hiring and Regional Flexibility

Some federal departments with regional offices are open to hiring talent from other states. However, majority of the headcounts still require candidates to be Canberra-based due to team co-location and delivery requirements.

Departments in the ACT are advancing IT modernisation and cybersecurity uplift, while managing insourcing strategies as part of broader workforce reforms. Procurement practices are evolving, with many exploring strategic alternatives such as managed service models to engage skilled technical workers.

Jan Pedralvez, Division Lead

TEKsystems, ACT

New south wales (NSW)

To accelerate digital transformation, in-house IT capability building, and AI adoption, organisations are rethinking how they modernise platforms and source in-demand digital talent.

Digital Transformation and Platform Modernisation

Organisations are prioritising digital transformation to streamline operations and enhance customer experience. This includes modernising legacy platforms and shifting to dynamic solutions to enable automation and consolidate functionalities. The NSW Government is phasing out legacy technologies in favour of modern and adaptable solutions that enhance operational resilience and service delivery.

In-House Capability Development

Several enterprises, especially in financial services and technology, are establishing internal digital innovation hubs to reduce reliance on external vendors, safeguard IP, and control costs. The focus is on building proprietary technologies in-house to strengthen strategic autonomy.

AI Integration and Workforce Adaptation

The AI adoption rate in NSW’s metro areas stands at 34%, compared to just 18% in regional areas. While AI is being used to enhance efficiency, workforce productivity, and customer service, its long-term impact on business ROI is still being evaluated. Candidates who can effectively leverage generative AI tools are increasingly in demand.

Onshoring vs Offshoring

Enterprises are increasingly offshoring technical roles such as development, testing, and application support, while keeping digital and creative, project management, and functional roles onshore for localised insight and close collaboration. Contact centres continue to adopt follow-the-sun support models to maintain global coverage.

Cybersecurity and Cloud Talent Shortages

Cybersecurity remains a high-growth area due to rising data breach risks, particularly in financial services, telecommunications, and public cloud environments. There is also a shortage of professionals with multi-cloud expertise, prompting organisations to recalibrate their talent attraction, development, and retention strategies.

Cross-Functional Skill Integration

There is increasing demand for professionals who can blend technical expertise with customer-centric thinking. The lines between marketing, data, and technology roles are blurring as digital teams seek multifaceted talent capable of bridging user experience, analytics, and technical delivery.

victoria (VIC)

Organisations are accelerating AI adoption and cloud modernisation while reshaping talent strategies, service models, and workplace expectations to stay competitive.

AI Adoption

Businesses are rapidly adopting AI, with significant budgets approved even without clear success metrics. The push is driven more by a fear of falling behind than a deep understanding of AI’s application. This urgency is reshaping governance, data security, and decision-making processes – reflected in the 27% AI adoption rate across the state.

Data Transformation and System Modernisation

Organisations are investing in elevating customer-facing platforms to better manage and leverage their data. There is a shift from on-prem infrastructure to cloud platforms, with many accelerating their exit from traditional data centres.

Talent and Skills Demand

With Melbourne being home to more than half of Australia’s top 20 technology companies, demand is rising for professionals skilled in AI/ML, data governance, cloud, and Python development. These roles are increasingly filled by senior candidates due to their strategic importance.

Candidate Trends and Work Preferences

75% of organisations in Victoria have minimum requirements for attending the physical workplace. In the post-pandemic years, employers have been pushing for more onsite work, while candidates continue to push back – preferring hybrid arrangements and flexible hours to accommodate commitments outside of work.

Upskilling and Career Anxiety

Professionals are actively upskilling in response to the evolving technology landscape, particularly around AI. There is growing awareness of the need to stay relevant, with many engaging in training, networking forums, and AI certifications.

Employee Experience and Technology Expectations

Employees now expect a seamless, integrated technology experience. Frustration with fragmented systems is growing, and there is a strong preference for consolidated platforms that support productivity.

The Melbourne IT market is rebounding in 2025, with strong demand for AI talent – especially in generative AI, machine learning, and cybersecurity. Companies are shifting from AI experimentation to strategic implementation, but competition for senior-level expertise remains fierce.

Greg Jones, Account Lead

TEKsystems, VIC

queensland (QLD)

Organisations are navigating shifting workforce expectations, budget cycles, and AI curiosity while prioritising value-driven services and strategic growth in sectors like energy and heavy industries.

Whole-of-Government Technology Overhaul

The Queensland Government is investing AU$1 billion to streamline technology delivery and unify IT systems across 19 departments. As outlined in the 2025–26 state budget, this digital fund supports a whole-of-government approach to digital transformation over four years. The integration of emerging technologies is streamlining operations and enhancing services, aligning with Queensland’s vision for an innovation-driven digital economy.

Infrastructural Uplift for Brisbane 2032

The Brisbane Olympics is beginning to influence public sector spending, with budgets increasingly redirected towards infrastructure upgrades and state-level programmes. This is driving significant IT investment in smart city technologies, digital services, improved public transport, and upgraded communication networks. These developments are expected to increase job opportunities and shape procurement priorities in the public sector.

Stability Across Heavy Industries

Energy, utilities, and heavy industries continue to be resilient despite the volatile macroeconomic environment globally. Sustained demand is driving continued investment in infrastructure optimisation, digital transformation, and workforce development.

AI Curiosity and Emerging Adoption

AI is gaining traction, particularly in data and cybersecurity. While not yet a core requirement, candidates with AI-related side projects or upskilling are seen as more valuable. Organisations are also exploring how AI integrates into operating models to boost innovation and efficiency.

Demand-Supply Mismatch

Strong demand for talent in cybersecurity, cloud computing, and data science has created intense competition across sectors, prompting organisations to focus on bridging skills gaps.

Workplace Flexibility and Candidate Expectations

75% of Queensland-based employers have minimum requirements for attending the physical workplace. More organisations are mandating 4–5 days onsite, but candidates continue to prefer hybrid arrangements (2–3 days) and flexible working hours.

Conclusion

With 59% of CIOs across Australia prioritising technology financial management, the focus is shifting toward treating IT as a profit centre. To seize opportunities in the country’s expanding digital economy, organisations must act boldly – modernising infrastructure, embedding AI, and enhancing cybersecurity. Aligning technology strategy with workforce expectations and delivering measurable outcomes will drive the next wave of digital innovation.

Contributors

Josh Dixon, Division Lead, TEKsystems

Greg Jones, Account Lead, TEKsystems

Rachelle Matta, Senior Account Manager, TEKsystems

Jan Pedralvez, Division Lead, TEKsystems