Many citizens are expecting more from their governments—and that is prompting some officials to innovate without sacrificing service quality.

This isn’t always easy given the mounting fiscal pressures some governments are facing. Rising debt, higher health care costs, and costs of other programs can make it harder than ever to balance budgets. And short-term cuts are not always enough.

They can focus on creating significant and lasting cost reductions by taking actions that employ a broader, more integrated view of their organization, structures, and mission.

Working smarter

According to the Institute of International Finance, government debt globally reached approximately US$106.7 trillion at the end of 2025. What governments may need to do is work smarter. Artificial intelligence, automation, and digital platforms can revolutionize public sector efficiency and help pave the way for new cost management approaches.

Many governments around the globe are already drawing on technology. But technology is just one part of the equation. To really achieve transformative change, some governments are taking three key actions to rethink their processes and how they deliver services.

1. Operational efficiency: Rethinking the “how”

New digital tools—especially AI—can accelerate routine work, cut errors, and free people to focus on higher‑value tasks. For example, a UK council used GenAI to turn complex documents into easy‑to-read versions across 75 languages, dropping translation costs from £120 a page to under £0.10. And in Australia, a pilot of GenAI tools saved staff about an hour a day on administrative tasks.

Shared technology platforms and strong data infrastructure are also helping by diminishing redundant processes and tools among government agencies. For example, Indonesia is in the middle of an effort to consolidate some 27,000 government applications into a single “super app” that enables citizens to access government services and permits civil servants to access employment-related functions.

And then there’s fraud detection. Advanced analytics and cross‑agency data sharing can help make fraud, waste, and abuse easier to detect and prevent, yielding real cost savings. A strong digital public infrastructure (DPI) can help prevent waste in government service delivery. DPI has enabled Indian agencies to remove duplicate beneficiaries and properly direct aid. It has saved the government more than US$41 billion.

But these budgetary wins often come from pairing tech with smarter processes, training, and governance so people can use the tools effectively. Technology investment can help governments operate more efficiently, but leaders should rethink service delivery to help make the gains real and lasting.

2. Structural transformation: Rethinking the “who”

Structural transformation often focuses on four key areas: consolidation, shared services, privatization/public-private partnerships (PPP), and real‑estate rationalization. Consolidation involves merging agencies while sharing services such as IT, HR, finance, and procurement across agencies to help streamline processes. Privatization or public-private partnerships can transform underutilized assets into monetary gains and shift operational risks onto private entities. Meanwhile, real estate consolidation leverages hybrid working models to help reduce office space needs and associated expenses.

These approaches can yield results for governments. The United Kingdom has started an initiative where three major UK government departments will share a digital platform for HR, finance, and procurement. The shift is expected to help lower costs and offer improved access to the latest technologies. And in real estate, the government of Canada is looking to reduce their office portfolio by 50% over the next 10 years by increasing hybrid work.

3. Demand management: Rethinking the “what” and “for whom”

Government social-welfare expenditures have climbed over the past century and are challenging to reduce as beneficiaries expect sustained services. To help address rising demand and control costs, some governments are focusing on approaches that promote employment and improve health outcomes.

Promoting employment can connect assistance to job search, training, and skills development and fund active labor market programs that help people find employment and stay in the workforce. Examples include Denmark’s “flexicurity” model, which pairs generous retraining and reintegration services with participation requirements. Since 2014, the number of social benefit recipients has decreased as more Danes have moved into employment.

Improving health outcomes can emphasize prevention and overall health to help reduce hospitalizations and long-term costs. This includes public health campaigns, and incentives that reward improved population health. In North Carolina, rewarding providers that improve population health outcomes at a lower cost of care has helped save the state over US$155 million in three years.

Making smart moves

Taking any of these actions can seem daunting. Governments can start with small, low-risk initiatives to achieve quick wins. After successful pilots, governments can start to scale—with an eye to clear governance, stakeholder communication, and workforce transition plans.

The first step, however, is the ability to look beyond budget-cutting and see how new technologies can enable more innovative methods. By doing so, governments can continue to provide the level of services their citizens expect while delivering it in a way that aligns to their desire for fresh tactics.

To read more about cost leadership in government, check out Deloitte Insight’s Government Trends series. You can learn more about our work in central government here.