Top 5 It Outsourcing Trends

Gimena Aguerreberry
July 15, 2021

Software is needed in almost every industry, in every business, and for every function. IT outsourcing is quickly gaining popularity as it helps to reduce software development costs, provides access to a global talent pool, allows using cutting-edge technology, and a lot more.

Outsourcing industry trends are especially viable in the IT sector, where this drive has rapidly developed from a nascent novelty into a regular practice. Consumers and vendors of digital products and services benefit from this business approach exceedingly, which is sure to add substantially to the $3.9 trillion that was spent in the departing year by the stakeholders of the global IT market.

IT services are outsourced by organizations for many reasons, from operational flexibility, through the need for new, specific skills to cost-saving. However, trends on the market are changing, and some will be less significant than they have been in recent times.

IT Outsourcing Software Development Statistics in 2021

The value of IT services companies delegated to external suppliers may exceed $413.72 billion by the end of 2021, according to Statista.

And the value of the IT outsourcing market is expected to grow by about 5% each year in the years 2020–2024, according to the Global Industry Analytics report.

The tech talent shortage is the major long-lasting trend that has been fueling the IT outsourcing sector for the last decade.

It Outsourcing In 2021: Key Insights

  1. According to the IT outsourcing statistics by Technavio, the value of the IT outsourcing market is expected to reach $486.16B by 2024.

  2. The majority of organizations across sectors are accelerating their digital transformation, especially fintech, healthcare, and telecom. Businesses in these industries are following IT outsourcing trends and are the most likely clients who are searching for IT outsourcing services.

  3. Cloud technology is on the rise. Companies will increasingly outsource the migrations, maintenance, security, compliance, and day-to-day troubleshooting related to the cloud. According to Gartner, cloud system infrastructure services are expected to grow from $44B in 2019 and reach $81B by 2022.

  4. The crisis caused by the global pandemic has impacted IT outsourcing trends in 2021. It has a significant impact on business decisions and technology investments planned for 2021. A growing number of companies of different sizes plan to increase their use of IT outsourcing.

The global tech talent shortage amounted to 40 million unfilled jobs in 2020. By 2030, the shortage is predicted to reach 85.2 million workers. During these 10 years, the skill shortage will cause an $8.4 trillion loss in revenue for companies worldwide.

  • McKinsey’s survey shows that 87% of organizations are already experiencing a talent shortage.

  • Sweden alone will be short of 70,000 developers or digital-related specialists by 2022.

  • Israel, one of the top three tech startup nations of the world, is experiencing a 15% software developer shortage.

The disaster created by the global pandemic has influenced IT outsourcing in 2021. It has a significant impact on the business decisions and technology investments planned for the future. These are the Top 5 IT Outsourcing Trends:

1. AI, IoT, and Robotic Process Automation

Technical transformation efforts of online businesses will be aimed at making online shopping more convenient. Businesses with an online presence will heavily invest in building top-notch online shopping platforms.

Statista predicts that more than 2.14 billion people worldwide will be purchasing services and goods online in 2021. Nasdaq goes even further, making a prediction that by 2024, about 95% of all retail purchases will be made online.

2. A Change in the Role of Outsourcers

The importance of outsourcers in software development is gradually increasing. Given the complexity of projects and their core significance for the successful operation of entire enterprises, outsourcers will be recognized as decision-makers on the same footing as the managerial personnel. They will share in strategic planning, risk prevention, system architecture design, and generally act as visionaries responsible for policy-making in organizations.

3. Remote Work

The World Economic Forum claims that the number of permanent remote workers is set to double in 2021. Just like many other high-income industries, the IT sector has shifted to remote work after the strike of the COVID-19 pandemic.

However, even before the pandemic, the majority of tech businesses in popular outsourcing destinations had been working in remote mode.

While some tech businesses increased their IT budgets on the brink of the pandemic, the rest continued to work with their nearshore and offshore IT outsourcing partners to reduce development costs.

Due to all-remote work, COVID -19 has eliminated borders across countries. It has accelerated the globalization and cultural diversity trends that started a few years ago. Companies will continue to hire top talent from across the globe in the post-crisis world.

4. A Growing Demand for Specialization

Today, the pace of scientific progress is so swift and the scope of digitalization is so vast, that it is hard for an in-house IT department (if the company has one) to stay in the know of all that is going on in the high-tech realm.

According to Burning Glass Technologies, quantum computing, connected technologies, fintech, AI & ML expertise are expected to be the most in-demand tech job skills in 2021. Also, companies will look for professionals skilled at automation, cybersecurity, and the cloud. Demand for AI and Machine Learning skills is growing at a 71% compound annual growth rate through 2025, with 197,810 open positions today.

5. An Increasing Interest For Progressive Web Apps

With an increased demand for a better user experience, there’s an increasing need for PWA. They are designed to create an application-like experience on websites.

The first wave was the unfriendliness from Google to the website with no mobile version. The second wave is the customers themselves who will not welcome a website with a negative UX. That is why businesses will be seeking outsourcing companies to employ PWA and satisfy the rising demands of their clients.

Final Thoughts

IT outsourcing is undergoing constant transformations trying to address the challenges posed by the ever-shifting external conditions. Digital service providers that take those challenges in their stride have a definite edge over their competitors. At Sophilabs our qualified and versatile experts are ready to tackle any software project you have in mind that is sure to bring value to your business.

We’d love to work with you.

We treat client projects as if they were our own, understanding the underlying needs and astonishing users with the end results.

"Top 5 It Outsourcing Trends" by Gimena Aguerreberry is licensed under CC BY SA. Source code examples are licensed under MIT.

Photo by Leon

Categorized under software development.