Last year, we foreshadowed the emergence of extreme digital sovereignty due to a culmination of factors, namely the emergence of three regional tech markets in response to the generative AI boom amid geopolitical tensions; middle-power nations’ attempts to regulate US-based tech firms following domestic calls to curb tech’s negative effects on society; and, finally, the Trump administration’s America-first agenda that’s hastening the collapse of post-World War II international norms.

Looking forward, governments chasing digital self‑sufficiency will accelerate tech nationalism by mandating sovereign AI, hardening cyber posture with agentic tools, and tilting big civil procurements toward defense vendors. Meanwhile, accessibility rules will expand and a private‑sector slowdown will drive a public‑sector hiring windfall. Therefore, in 2026, if you are a public-sector leader or key partner to the sector, you should expect:

  • Global digital norms will give way to tech nationalism when it comes to AI models. Amid geoeconomic fractures and AI disruption, 2026 is the year governments choose domestic-first, from model selection to hosting, rewriting AI procurement and compliance in the process. The EU AI Act, IndiaAI Mission, Japan’s AI Promotion Act, and the US’s Executive Order 14179 all signal a growing preference for sovereign AI. The result? We expect that half of the G20 will mandate domestically tuned AI models for public‑sector services. For firms offering solutions to the public sector, prepare for this inevitability by undertaking a thorough inventory of your model provenance along with in-market hosting options for inferencing, or risk exclusion from future public‑sector opportunities.
  • Government use of agentic AI will trigger a breach with diplomatic fallout. As Anthropic has recently reported, criminals are already exploiting automated capabilities including AI. Next year, we expect this to go further, with at least one state‑linked agentic AI operation crossing a diplomatic line and forcing a political response from the global community — from sanctions to formal protests. Security and risk leaders must prepare for the potential of such attacks by adopting Forrester’s Agentic AI Guardrails For Information Security (AEGIS) Framework to ensure the auditability and security of their defensive and offensive agentic systems. To put it simply, put auditability, containment, and testing for agentic AI under a single control framework before an adversary tests it for you.
  • Defense industry players will win a third of the biggest civilian software deals. Security requirements and mission pressures will bring advantage to defense‑aligned firms as civilian agencies modernize under the specter of geopolitical tension. Palantir’s IRS win and Systematic’s healthcare play are just the start of the new acquisition landscape influenced by GDP-based defense spending targets. Despite traditional tech platforms pivoting in response, such as Salesforce’s recent Missionforce announcement, a third of the largest civilian software procurements will go to defense firms in the next 12 months. Public-sector procurement leaders, especially in nondefense organizations, must refresh vendor strategy and due diligence methods to evaluate both outcome fit and security posture, not just price and features.

Mission leaders, beware: Digital autarchy is not a panacea for today’s global uncertainty. The last hundred years is littered with failures for those who tried, from Spain under General Franco to Chairman Mao’s self-reliant China. Instead, treating sovereignty thoughtfully as globally connected integration rather than singular isolation reduces costs, builds resilient ecosystems, and unlocks innovation, a fact echoed by the 2025 Nobel Prize in Economics winners’ reminder that openness and creative renewal are engines of sustained growth. The challenge for public-sector mission, business, and technology leaders in the coming year is learning how to balance national imperatives with global interoperability, without risking turning resilience into rigidity.

Forrester clients can read our full Predictions 2026: Public Sector And Government report for more detail about these and other predictions. Schedule a Forrester guidance session to discuss these predictions or plan out your 2026 strategy.

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