A new report highlights that while governments are preparing for large-scale AI adoption, many are still stuck at early stages due to structural and operational barriers.
According to the “KPMG Global Tech Report 2026: Government and Public Sector,” 48% of government organisations aim to deploy AI use cases at scale within the next 12 months. However, 43% admit they are facing significant challenges in moving beyond pilot projects.
“Governments report being in the early stages of AI adoption… however, challenges scaling are increasingly evident in the data,” the report noted.
Based on insights from 115 government leaders and technology decision-makers, the findings reveal a widening gap between ambition and execution in public sector digital transformation.
One of the key issues is poor coordination across departments. Governments are “struggling to integrate their data across functions, departments and ecosystems” and remain “limited by siloed thinking.” At the same time, nearly 40% of technology budgets are still spent on maintaining existing systems, slowing down transformation efforts.
Cybersecurity remains another concern. While 64% of respondents plan to increase investment in cybersecurity, only 38% say their current capabilities are mature. “Data protection and security concerns are the top factor slowing collaboration,” the report said.
Data management also continues to lag, with just 37% of organisations achieving high maturity in enterprise data systems. The report stresses that “clean, reliable, integrated and accessible data is the key to delivering service transformation from technology investments.”
Talent shortages further complicate progress. Governments are struggling to build the skills needed for emerging technologies, with 86% of respondents stating that managing AI agents will become a critical skill within the next 5 years.
To bridge these gaps, 75% of organisations plan to expand partnerships and technology ecosystems, although concerns around cost, security, and alignment remain.
The report concludes that leading governments are shifting focus from processes to outcomes, prioritising citizen experience and experimentation to drive meaningful transformation.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream LinkedIn | The Mainstream Facebook | The Mainstream Youtube | The Mainstream Twitter
About us:
The Mainstream is a premier platform delivering the latest updates and informed perspectives across the technology business and cyber landscape. Built on research-driven, thought leadership and original intellectual property, The Mainstream also curates summits & conferences that convene decision makers to explore how technology reshapes industries and leadership. With a growing presence in India and globally across the Middle East, Africa, ASEAN, the USA, the UK and Australia, The Mainstream carries a vision to bring the latest happenings and insights to 8.2 billion people and to place technology at the centre of conversation for leaders navigating the future.
