# Australian Agencies Increase Outsourcing Spend

In June 2026, key Australian government agencies notably increased their outsourcing expenditures by $500 million, representing a 13% rise from the previous year and a 220% increase since June 2024. Despite federal policy initiatives aimed at reducing outsourcing and promoting insourcing, agencies such as the Department of Defence's Capability Acquisition and Sustainment Group and the Australian Taxation Office (ATO) have driven this surge. The ATO recently extended a contract with IBM Australia for software services, underscoring ongoing reliance on external contractors. This trend highlights challenges in meeting government procurement reform goals and insourcing targets.

- **Why this matters:** Procurement professionals should recognize the persistence of outsourcing demand within Australian federal agencies despite policy shifts, indicating continued opportunities for contractors.
- Agencies like the Department of Defence and ATO remain significant buyers of outsourced services, particularly in IT and capability acquisition domains.
- Businesses should evaluate how evolving government procurement policies may impact contract strategies and prepare for potential shifts in sourcing priorities.
- Organizations supporting software and technology services, exemplified by IBM Australia's contract extension, may find expanding opportunities amid this increased outsourcing activity.

**Jurisdictions:** federal
**Industries:** Defense & Military, Information Technology
**Topics:** Contracting Vehicles, Policy
**Published:** September 27, 2026

### Government Entities
- Australian Taxation Office (ATO)
- Department of Defence
- Department of Finance

### Vendors
- IBM Australia (contractor)

### Sources
- [The government wants less outsourcing. These agencies…](https://www.inkl.com/news/the-government-wants-less-outsourcing-these-agencies-spent-500m-more) - inkl