Artificial Intelligence (AI) in Government Market is estimated to grow at a CAGR of 29.07% during the projected period, accounting for a total market size of US$85.470 billion by 2030, up from US$23.860 billion in 2025.
Governments worldwide are becoming increasingly interested in artificial intelligence (AI) technologies. They are investing heavily in AI, dedicating budget and time to piloting various AI applications and discussing with experts in this field their future technology innovations. These innovations can be utilized to change how work is performed, from law enforcement to running transportation projects. Air Force Central in the United States is increasing its use of AI technology, leading to a significant trend in AI equipment usage across governments due to the massive accumulation of data. This cuts down on the cost of storing and processing all this data.
The increasing use of cloud computing solutions also drives AI in the government market’s growth because cloud computing combines data, cognitive services, and edge computing, enabling rapid response time by deputies. As machine learning continues to enhance the technological aspects of various applications, it will increasingly fund deep research into AI. Various global governments are collaborating with industry players and academic institutions in myriad AI projects for the public, such as managing traffic and digitizing past government paperwork. This will generate positive market growth of AI in government during the forecast period.
Moreover, chatbots are the most popular form of AI in the government. They used to provide very targeted applications that could answer basic procedural questions early on in the process. However, the absolute value increased as they became more productive, as they could converse and answer questions while giving feedback for better customer service. As citizens are already using AI for a digital assistant/bot or any other intelligent service in the commercial market, governments are implementing AI in their services since citizens will more readily accept these technologies.
The government sector is increasingly embracing AI technology in its services since it assists in cost-cutting and boosts efficiency. AI effectively automates tasks, simplifies processes, and optimizes workflows, reducing costs and helping to effectively utilize resources for the progress of public services. AI can deliver data insights, enabling advanced data analysis to predict future trends and capture security risks early, leading to advanced decision-making. For instance, a Microsoft data report of June 2024 estimates that utilizing the GenAI tool could save the UK public sector £17bn by 2035, yet even just a five-year delay in adoption would lead to a loss in its economy of up to £150bn.
In addition, AI is capable of assisting governments in conducting data-driven analysis to aid evidence-based policymaking, avoiding assumptions with evidence, and using proper forecasts provided by AI. As governments seek to scale up public service performance, the need for AI technologies has been recognized as significant, consequently contributing to the exponential growth of the AI market worldwide.
The AI can assist in ensuring the security of government services, including their public systems and data, against cyber threats, fraud detection, and border control. It can also potentially enhance public services by allowing them to be tailored for each citizen, rendering them more accessible for disabled or disadvantaged people with limited resources. In addition, AI-powered tools can predict what a specific citizen requires beforehand and deliver the necessary service proactively. This immediate access that citizens can utilize captures demand more accurately and improves government responsiveness. By enabling governments to deliver better, faster, and more secure services, AI is likely to become even more imperative, as it sees AI technology in practice for citizen benefits.
Moreover, governments are implementing AI technology in public services involving advanced data security. For instance, in September 2024, Canada's President of the Treasury Board introduced public discussions on the country's first AI technique for the government public service. The consultations will assemble insights from Canadians on the suitable utilization of AI within the federal government. The declaration was made amid the yearly assembly of digital government ministers at the Symposium on Digital Trust and Cyber Security. This points to developing cybersecurity, digital belief, and capable AI utilization in Canada.
The state and local governments have been slower in adopting AI than private businesses. Meanwhile, different government administrations have yet to replace the first IT infrastructure to fully leverage AI technology to minimize compatibility problems. On the other hand, market growth is restricted due to a lack of computing resources for AI projects within government departments, as many government agencies are unable to set up data centers that can handle heavy data, which might require costlier graphical processing units. Another factor hindering this market’s growth is the lack of data scientists and subject matter experts within the government, necessary to identify problems AI could solve for a government department.
| Report Metric | Details |
|---|---|
| Total Market Size in 2026 | USD 23.860 billion |
| Total Market Size in 2031 | USD 85.470 billion |
| Growth Rate | 29.07% |
| Study Period | 2021 to 2031 |
| Historical Data | 2021 to 2024 |
| Base Year | 2025 |
| Forecast Period | 2026 – 2031 |
| Segmentation | Offering, Technology, Geography |
| Geographical Segmentation | North America, South America, Europe, Middle East and Africa, Asia Pacific |
| Companies |
|