Governments are embracing the digital revolution: the GovTech sector, valued at over $430 billion, is projected to reach an astonishing $1 trillion by 2027. One of the major players contributing to this transformation is P2H, an IT company with more than 17 years of experience developing a wide range of solutions, from websites and e-commerce to enterprise and govtech. P2H has already garnered the trust of over 100,000 customers and millions of end-users.
I spoke with Dmitriy Breslavets, a co-founder at P2H, who provides insight into GovTech from a developer's perspective and delves into the unique challenges and opportunities that arise when working across different regions.
— Let's start with a short intro. What exactly is GovTech?
— GovTech initiatives include a broad spectrum of projects, ranging from user-friendly government websites and mobile applications to data analytics and artificial intelligence systems. Governments are deploying chatbots to interact with citizens, blockchain to enhance identity verification and authentication, and digital voting systems to make elections more accessible. GovTech also extends to smart city initiatives.
Many countries already have comprehensive e-government portals that offer services like registering companies, applying for permits, and paying taxes. Digital India program, South Korea’s Digital Government Initiative, and the USA.gov portal are notable examples.
— How did P2H start working with government agencies?
— Our approach has always revolved around establishing strong, trust-based relationships with our partners through the flawless execution of small tasks, which we call the "quantum of trust."
We first encountered a government client when they had a straightforward design-to-HTML conversion request. We executed it with precision, which prompted our client to entrust us with more challenging projects. Over time, as their confidence in our abilities grew, they presented us with more complex and demanding tasks in the e-government sector.
— In which markets are you currently operating?
— P2H operations span across three key regions. In the Middle East and North Africa, we have successfully established a local presence with an office and a dedicated team.
Our European endeavors start in Portugal. We plan to expand into Spain, bypass the well-digitized markets of France and Germany, and foster collaborations in Slovakia, Slovenia, and potentially the Czech Republic.
Finally, due to its high maturity level, the US market presents unique challenges. However, we actively participate in tenders and study the landscape to enhance our management and production capabilities. This approach will ultimately allow us to deliver top-tier products tailored to local needs.
— In 2022, the International Bank for Reconstruction and Development mentioned significant progress in digitizing government services in Bangladesh, Egypt, Oman, Mongolia, Tanzania, Saudi Arabia, and Ukraine. Can you elaborate on the reasons behind this success?
— These countries have just recently embarked on the path of government digitalization. This means they can leverage the experiences of others to develop modern, efficient, and user-friendly services without compatibility concerns with outdated systems. They can adopt or adjust comprehensive, ready-made solutions to meet their unique requirements. This fact enables a swift transition from paper-based processes to fully digital ones.
For instance, Ukraine had limited exposure to GovTech until recently, when the Ministry of Digital Transformation was established in 2019. The Ministry launched the Diia portal, which has over 19 million users and more than 30 government services available in a few clicks on a smartphone. It is also a powerful brand, and some African nations are even importing the platform.
Conversely, digitalization started decades ago in the US and parts of Europe. These regions already operate intricate, long-standing systems that can be challenging to replace or modernize. Citizens have also grown accustomed to specific business processes and interfaces. As a result, governments have to maintain old solutions. As far as I can tell, overhauls only occur when there is a compelling need, budget, and will to do so, which is often lacking.
Interesting fact: the demand for COBOL developers was higher than ever during the pandemic. This programming language from the 1960s is often used in legacy government apps.
— From a GovTech developer's perspective, which regions are more convenient to work with?
— From my perspective, there's nothing more challenging for a developer than working with existing code. The task isn't just to avoid breaking it but also to build upon it. Most programmers prefer starting from scratch. Countries at the start of their e-government journey can afford to do so.
I’ll give you an example from our experience. Expanding to the US and Europe often involves integrating with Microsoft products. However, we can offer open-source platforms, Linux, various cloud solutions, and more in Saudi Arabia. They are open to considering different options to avoid dependence on a single vendor. This strategy allows them to create diversified technical solutions, which are easier to maintain.
Dealing with legacy systems comes with challenges. It becomes a vicious cycle where improvements are necessary but limited to avoid disruptions. This emphasizes the importance of will I already mentioned. Someone needs to take responsibility for change and be willing to take risks for the transition to happen.
— You have substantial experience implementing GovTech solutions in Saudi Arabia. Could you share your thoughts on the specifics of this market?
— Saudi Arabia, or KSA, is one of the countries digitizing government services from scratch, leveraging the experiences of more digitally advanced neighbors like the UAE. Currently, it is executing the Vision 2030 program for economic diversification, global engagement, and enhanced quality of life. The program includes e-government as a core component of its strategy.
Saudi Arabia can afford to hire numerous consultant specialists to oversee the process. Moreover, the country strictly follows a vendor diversification approach when developing digital platforms. This approach allows them to mitigate risks in case one of the vendors withdraws from the project. Additionally, companies seeking contracts must create jobs within Saudi Arabia. The government mantra is, "We don't work with those who come solely for profit."
I am confident that this strategy will enable KSA to achieve its goals. We actively contribute to government digitalization along with other vendors. We don't consider each other competitors but rather collaborators, understanding that we can't monopolize the entire market. This fosters the growth of "co-opetition," where suppliers share knowledge, conduct cross-audits, and recommend solutions to one another.
— Could you also describe the peculiarities of the Portuguese and US markets?
— From what I’ve seen, Portugal has already automated many basic scenarios. The ePortugal portal provides a wide range of online services to citizens and businesses, covering tax-related issues, business registration, employment, social security, healthcare, and many other areas.
However, evolving needs give rise to new challenges. Portugal envisions itself as an innovation hub in Europe. To achieve this goal, the country hosts regular Web Summit conferences and creates favorable conditions for nomads and businesses. There is a growing demand for startup-related GovTech solutions.
It's worth noting that Portugal rigorously selects vendors, which makes the process relatively time-consuming. There are also stringent requirements for suppliers seeking to operate at the federal level in the US. However, GovTech is highly decentralized there. There is substantial demand for digitalization at the municipal level. Local authorities are focused on addressing specific issues and are relatively flexible in selecting contractors.
— How can the digitalization of public services be made effective?
— In my experience, an in-depth understanding of the customer, whether an individual or a business, enables us to create user-centric solutions. Governments must possess deep insights into their citizens to make systems that will be in demand. Otherwise, platforms may function but remain underutilized as they are inconvenient, difficult to navigate, or incompatible with specific devices.
In Saudi Arabia, for example, there is a keen understanding of the population's needs. KSA ministries account for cultural factors, technical capabilities, and internet prevalence. They aim for accessibility, even for citizens with older phones, ensuring all can, for instance, make electronic donations during Ramadan.
— Is it accurate to say that GovTech development always involves significant expenditures?
— In general, yes, because GovTech systems are high-traffic and serve millions of users. Furthermore, they demand top-tier UI/UX to ensure user clarity. I'd also like to point out that robust support is crucial. The consequences of a specific company's website or application breaking vastly differ from when an entire nation's operations are disrupted. The responsibility to citizens is monumental, as are the potential costs in case of system failures.
On top of that, government entities must safeguard sensitive citizen data, ensure their privacy, protect against rising cyber threats, and maintain secure communication channels, all of which add to the cost of GovTech projects.
— What trends are currently emerging in the GovTech field?
— One notable trend I'm seeing is AI becoming increasingly widespread. Governments can utilize AI to facilitate various tasks, including immigration assessments, fraud detection, infrastructure planning, customer support, and many others. For example, Singapore has a virtual assistant called "Ask Jamie." It uses AI to help people and businesses find information from around 70 government agency websites. By 2030, AI is expected to contribute over $15 trillion to the global economy, with governments being one of the key beneficiaries.
Countries that proactively explore ways AI can enhance interactions between citizens and governments can gain a significant advantage in the future.
— Are there any obstacles preventing the growth of AI in GovTech?
— AI development is heavily dependent on resolving regulatory concerns. Government entities place great importance on data security and risk mitigation. They have to serve the public fairly and thus comply with rigorous standards when addressing critical AI matters such as trust and safety.
Businesses may be willing to take certain risks in pursuit of competitive advantages. However, governments have no competition and, therefore, no reason to choose technological convenience over reliability. This fact may impede progress. Once regulatory barriers are successfully overcome, the pace of AI development is likely to become unstoppable.