Federal efforts to reduce outsourcing across all areas of the public service face a challenge in the technology sector, where spending on contractors continues to increase.
Under the federal government's Strategic Commissioning Framework, departments have been tasked to achieve a service-wide reduction in contractor reliance, with individual agency heads required to identify core functions that should not be outsourced and establish explicit targets to transition those roles back in-house.
However, actual expenditure on information technology (IT) temporary personnel is rising in both contract volume and value.
A Canberra Times analysis of AusTender data showed federal expenditure on IT temporary personnel nearly tripled over a three-year period, surging from about $289 million in 2022-23 to more than $808 million in 2025-26.
Over that period, the volume of outsourcing arrangements increased more than 1.5 times, with the number of individual contracts climbing from 436 to 1104.
Across the four financial years, the government logged a total of 5444 contracts valued at more than $1.87 billion for these external technical services and support.
Within the public service, information and communications technology (ICT) and digital headcount expanded from 6896 workers in June 2022 to 9977 in December 2025, an increase of about 45 per cent.
Since 2023, most federal agencies have been identified as having a critical skills shortage in the Australian Public Service Commission's (APSC) State of the Service reports.
In those agencies, digital and ICT deficiencies were the most widespread and fastest-growing blind spots, with the proportion of departments reporting these specific shortfalls rising from 76 per cent in 2023 to 81 per cent in 2024, and peaking at 85 per cent in 2025.
Nearly two in three short-staffed agencies lacked enterprise and technology architects to manage internal digital transformations, and more than half identified a critical deficiency in the training and development of artificial intelligence models.
To establish a sustainable entry-level pipeline to counter these deficits, the government originally introduced a flagship Digital Traineeship Program to place 1000 candidates from underrepresented groups into technical roles. The $14 million program was launched out of the 2022 Jobs and Skills Summit.
It was revealed during the finance committee of the 2026 budget estimates that the program had been axed as there were only 73 sign-ups across the entire public service.
APSC officials said although there were plenty of eager applicants, agencies failed to register demand because they were focused on hiring ready-made experts rather than investing internal resources into mentoring entry-level staff.
Finance and Public Service Minister Katy Gallagher said the program had not worked.
"This program wasn't resulting in permanent placements in agencies, and so you can have two choices: press on with a program that doesn't seem to be filling the needs of agencies, or do you rethink your approach, and that is where we are at," Senator Gallagher said.
An AwardedTenders analysis of the Australian Public Service (APS) Gazette between 2023 and 2025 showed that the advertised digital positions heavily targeted mid-career professionals and remained concentrated in the nation's capital.
Positions at the APS Level 6 and Executive Level 1 classifications combined to account for 53 per cent of all digital vacancies, reflecting what appeared to be a prioritised demand for personnel with immediate technical and leadership capabilities.
About four out of five of these advertised roles listed the ACT as the primary work location, despite the region holding just 4.6 per cent of the national technology talent pool.
The data tracked the specific specialised roles being brought to market to patch critical gaps, showing that cyber security advertisements expanded eightfold over a six-year period to reach 195 roles annually, and data science and artificial intelligence vacancies plateaued at roughly 40 to 55 roles per year.
The mid-career recruitment occurred alongside a projection from the Digital Transformation Agency (DTA), which estimated the public service required an additional 8000 digital workers by 2030.
The forecast factored in an estimated 7 per cent annual growth rate in demand, alongside broader demographic shifts as one in five current public-sector tech professionals approached retirement age.
DTA chief executive Chris Fechner said work was under way to address the shortfall and the rapid technological disruptions were not unique to Canberra.
"Progress is being made on that gap," Mr Fechner said. "I would also state that the issue that we're talking about is not specific to the APS. It is a global and Australian position."
DTA deputy chief executive Lucy Poole said this push was being driven by a collaborative, cross-agency workforce plan, which included shifting the digital profession initiative into the DTA to focus on internal capabilities.
Ms Poole said the agency was tracking how tools like artificial intelligence could evolve the public service, allowing staff to shift towards "higher value and more strategic work".
