SLMs are purpose-built for the needs of the department or agency that will use them. The data is stored securely outside the model, and is only accessed when queried. Carefully engineered prompts ensure that only the most relevant information is retrieved, providing more accurate responses. Using methods such as smart retrieval, vector search, and verifiable source grounding, AI systems can be built that cater to public sector needs. 

Thus, the next phase of AI adoption in the public sector may be to bring the AI tool to the data, rather than sending the data out into the cloud. Gartner predicts that by 2027, small, specialized AI models will be used three times more than LLMs.

Superior search capabilities

“When people in the public sector hear AI, they probably think about ChatGPT. But we can be much more ambitious,” says Xiao. “AI can revolutionize how the government searches and manages the large amounts of data they have.”

Looking beyond chatbots reveals one of AI’s most immediate opportunities: dramatically improved search. Like many organizations, the public sector has mountains of unstructured data—including technical reports, procurement documents, minutes, and invoices. Today’s AI, however, can deliver results sourced from mixed media, like readable PDFs, scans, images, spreadsheets, and recordings, and in multiple languages. All of this can be indexed by SLM-powered systems to provide tailored responses and to draft complex texts in any language, while ensuring outputs are legally compliant. “The public sector has a lot of data, and they don’t always know how to use this data. They don’t know what the possibilities are,” says Xiao.

Even more powerful, AI can help government employees interpret the data they access. “Today’s AI can provide you with a completely new view of how to harness that data,” says Xiao. A well-trained SLM can interpret legal norms, extract insights from public consultations, support data-driven executive decision-making, and improve public access to services and administrative information. This can contribute to dramatic improvements in how the public sector conducts its operations.

The small-language promise

Focusing on SLMs shifts the conversation from how comprehensive the model can be to how efficient it is. LLMs incur significant performance and computational costs and require specialized hardware that many public entities cannot afford. Despite requiring some capital expenses, SLMs are less resource-intensive than LLMs, so they tend to be cheaper and reduce environmental impact.