Trends In IT Outsourcing

Mega Trends in IT Outsourcing are changing the world of technology.

the global IT outsourcing market size was estimated at USD 245.91 billion in 2021 and it was valued at around USD 261.9 billion in 2022.

In the next five years, i.e. by the end of the year 2027, the outsourcing industry’s total value is estimated to hit $405.6 billion. After all, outsourcing is the new cool.

This is one of those concepts that has changed the industry for the better. In addition to all the benefits it offers, it also helps companies reduce costs by about 15% on average but up to 60%.

30% of US-based companies outsource at least one function, and this IT outsourcing trend is not declining. In addition to this, 57% of companies outsource their work to increase productivity, and around 24% of SMBs that outsource do so to increase efficiency.

These stats clearly show the popularity of this outsourcing in the IT industry. In fact, even tech giants like Google, Apple, Meta, & Microsoft have also opted to outsource as with many other Fortune 500 companies.

Being an expanding industry, outsourcing has trends and mega trends of its own, as 4^th industrial revolution is in full swing. Now, if you are someone who wants to learn more about IT outsourcing and its related trends, this blog is for you.

Here, we shall be discussing everything related to outsourcing, its benefits, services, and so on. Therefore, with this being said, let’s get right into it:

What is IT Outsourcing?

So, before we look at the trends in IT outsourcing, let’s see what is outsourcing itself.

So, what is Outsourcing?

As the name suggests, if a company wants to avail of a service or wants to complete an operation, they hire dedicated developers or any other qualified professionals to do it for them. It is known as outsourcing because the service provider is a different firm that is outside the organization itself.

In other words, it refers to working with an external firm or company that will provide an IT function or service, we shall be discussing different functions later down the line.

Coming back, IT outsourcing is one of the top methods today. And there are various good reasons behind it.

For example, consider there is a company X that wants to develop a mobile app. Now, to do so, they need app developers. Not every business has the facilities, technology, or the right people to do it. If they choose to acquire their own resources for just one project, it will be very expensive.

However, in outsourcing this company X can outsource the app development project to IT development firm Y.

Companies like Y maintain all the required resources to serve function i.e. app development in this case. Therefore, the X Company gets a full-fledged mobile app of high-end quality at a budget-friendly price.

This is what IT outsourcing is all about. Now, there are different forms of IT outsourcing, let’s discuss them in the next section of the blog.

Types of IT Outsourcing

Now, if you are a business or a company that wants their work to be a Web and Mobile App Development Company, there are a few different options that you can go with.

In this section of the blog, we shall be going through these different types of IT sourcing. These are, as mentioned below:

• Offshore IT outsourcing

Hiring an offshore company is a trend in IT outsourcing itself, it’s just that popular. As the name suggests, the external vendor is located at a distance, i.e. on the other shore.

Now, there are various different benefits of this type. For instance, if you are a company based in the United States of America and hiring an external firm based in Asia, the cost is going to be very economical and you get options to choose from.

Therefore, this is by far the most popular option on the list.

• Nearshore IT outsourcing

As opposed to offshore, nearshore is the opposite. The external company here is located nearby to your company, usually in the same region.

One of the major benefits of this type is that communication with the development company is a lot smoother and more effective. This is a less cultural difference and the time difference is also lesser.

But on the flip side, this option is a bit more expensive than the previous one.

• Onshoring/ homeshoring IT outsourcing

Coming closer to the home, onshoring which is often also termed as Home Shoring refers to when a company outsources the work to an external company located within the same country.

Now, depending on the location the price can be highly differing as with operations.  Moreover, it also refers to hiring external employees who work from their homes.

This is the reason why it is known as homeshoring.

• Multisourcing

While the smaller projects are satisfied by choosing one of the above, there is a larger project which isn’t.

Therefore, in this situation what a business does is choose more than one external company to handle particular tasks. This option of IT outsourcing is known as Multisourcing.

These are the different outsourcing options. Now, let’s look at the different functions.

Top IT Outsourcing Services (Functions)

Now, there are different functions an external company can service. But in trends of IT outsourcing, we are looking at the popular IT functions.

Therefore, with this being said, let’s look at IT outsourcing services. These are, as mentioned below:

• Mobile App Development

Mobile app development services are a trend of their own.

There are billions of mobile phone users and millions of mobile apps in the world. And a lot of companies are developing their own mobile apps to expand their business operations.

So, it goes without saying that mobile app development services are the most popular IT outsourcing function.

• Web hosting and operations

Websites need to be hosted and the hardware required to do so is expensive to acquire and maintain.

For that reason, companies often outsource this to external firms who help them maintain the website, web app, or online marketplace.

• Disaster recovery

Well, sometimes tech companies can be the subject of disaster. A big flood broke every piece of equipment and all data is lost, for instance.

This is the reason why companies choose disaster recovery outsourcing services. Here, all the important data is stored on an off-site data storage and it can be recovered in case of emergency.

• Web Development

Just like mobile apps, web development services are very popular.

In fact, web development is much older than mobile applications and this is the reason why everyone is still hooked on it.

The importance of a website is irreplaceable.

• Datacentre operations

In this form of IT outsourcing, external companies provide services and help based on the data center and its various operations.

This is done via collaborating with the already established in-house team of the company.

• Maintenance & Support

Whether it is a mobile app, website, or software, it needs maintenance.

You see, a maintenance and support service plays an important role in leading the platform to success and the top spot on the platform.

This is the reason why it is one of the top functions of IT outsourcing.

• Desktop support

Companies often require IT support but can’t maintain their own IT team. Since it can get quite expensive.

Therefore, the easy solution is outsourcing the support work. Meaning they get help with the installation, maintenance, or support of PCs

• Custom Software Development

Well, well, large corporates love custom software. 64% of outsourced services are related to software application development.

It goes without saying that large companies have their custom needs and need unique software. This is the reason why they reach out to an external software development company to develop just that.

Custom software products are very much needed and that is why one of the Top functions on the list.

IT Outsourcing Trends in 2022

IT sourcing is one of the world’s largest industries worth hundreds of billions. And with the fourth industrial revolution, is going through big changes.

So, if you are looking for the current trends in IT outsourcing industry, we will be doing just that in this section of the blog.

Therefore, with this being said, let’s look at some of the top trends in IT outsourcing. These are, as mentioned below:

1) eCommerce

ECommerce is one of the largest industries in the world. The supply chain related to eCommerce changed completely during the covid-19 induced pandemic. They switched from being international to local for faster delivery.

The new structure is much more favoring eCommerce platforms as well as an online marketplace. These platforms were already quite popular. Now, with the increased traffic, businesses will focus on making the shopping experience much more convenient.

Moreover, online retail is also expected to increase. It was only 14% of total retail in 2019, but today, it’s around 22%. Moving on, it will be around 95% of all retail purchases by 2024.

Valued in hundreds of billions, this is one of the top trends in IT outsourcing. With this out of the way, we shall be discussing another top trend in the next section.

2) Cloud – Computing  

Cloud computing has been around for a long time. And ever since it was first launched, it has been changing the market.

Even today, during the 4^th industrial revolution, this technology stays as not just a trend but a “MEGA” IT Outsourcing Trend in 2023.

While cloud migration has been something that isn’t all that simple, it is still better than on-premise. This is the reason why in the coming years, more and more companies will be transferring to cloud-based storage.

With this, the industry will see explosive growth. In fact, just SaaS application development is expected to earn 113.1 billion U.S. dollars in 2022.

After all, this technology ensures better data protection, and faster operations, among other things. Therefore, this is a trend that you should definitely keep an eye out for.

3) 5G Network

A report shows that 5G will be widely adopted in China and North America by 2022. In addition to this, by 2027, the industry will be expressing a growth rate of 43.9%.

The best part is, IT or information technology or telecommunication and manufacturing are three industries that will experience the fastest penetration of 5G.

With a faster and wider network than ever, companies will create better IoT systems based on it. This will work well to connect manufacturing, transportation, and other systems. This connectivity will make the operations more effective.

This makes a top outsourced trend.

4) AI & ML Technologies

It goes without saying that AI & ML Technologies are two of the most popular technologies in recent years. Straight out of Sci-fi, these technologies have been explored by some of the world’s largest companies like IBM, Samsung, and Microsoft.

This is the reason why it is one of the most contradictory IT outsourcing trends in Europe and the United States of America.

It has various applications in various fields like automation and robotics. As such, businesses have been using it to create perfect AI-based Chatbot which has proven to improve operations.  As of today, AI-based chatbots are facilitating 90% of customer interactions. And the best part is, people are looking at it.

5) Cybersecurity

Last but not the least, Cyber Security.

Well, as the world is digitalizing, the risk of digital threats is also increasing. Moreover, with the recent changes where companies rely on outsourcing and remote work, this has become an even larger corner.

In fact, personal data stolen from social media users is worth $630 million a year. That’s why being secured against such threats has become an IT outsourcing trend in Australia, Asia, the Americas, and every other part of the world.

This is a trend that is here to say since 51% of businesses hired a full-time cybersecurity team in 2022.

These are some of the top trends in IT outsourcing. With this out of the way, you shall be wondering why you should choose to outsource IT services. Well, we shall be discussing this in the next section of the blog.

Why Choose IT Outsourcing? Benefits

Now that you have gone through Trends in IT outsourcing, let’s answer an important question.

Why choose to outsource, how are outsourced IT services beneficial?

Well, there are many benefits, for instance, reduced cost improved productivity, and so on. We shall be discussing all of these benefits in detail here. These are, as mentioned below:

• Access To Top Talents

If a business assembles its own in-house team, it will be recruiting for top talents, but it isn’t all that simple.

Well, finding the right talent in the industry is one of the most difficult things. Moreover, it’s expensive as anything.

Therefore, to save effort, time, and money, all a business needs to do is reach out to an outsourcing company. These companies are already masters of their specialization and have top talents in the field.

Furthermore, you get to choose from a pool of the best companies in the world. This makes everything that much better. This is one of the advantages.

• Cost Effective

As we discussed in the initial part of the blog, creating your own expert team can be expensive. Plus, you need to provide them with all the employee benefits, hardware, workspace, and so on. This can cost your business a lot.

On the other hand, external companies provide the same services with much better efficacy and lower cost. You just need to pay for the work they are doing and nothing else. This is one of the biggest benefits.

Read the blog- How Much Does It Cost to Develop An Mobile App in 2022?

• More Effective & Innovative

Outsourced It Support brings innovation to the company along with effectiveness.

The reason is that the external company has additional resources, expertise, and experience in specific fields. With their skills, they can take your idea to next level and create a market-leading tech solution out of it.

Moreover, with their team of service providers, they deliver professional effective, and innovative services.

• Focus on Internal Things

This is one of the best and largest benefit outsourcing companies offer. In fact, so much so that it leads to the creation of many Trends In IT Outsourcing.

Considering you are a company that wants to outsource eCommerce app development. Now, all you need to do is find an outsourcing company and hand over the project to them with your preferences and requirements.

After this, they will take care of it and keep you up to date throughout the process. And meanwhile, you can focus on another part of the business.

• Simplified Project Management

The success of projects of all kinds depends on how well they are managed; this is the reason why project management is important.

Now, when you outsource the work, you are improving project management quality to whole another level.  External companies follow planned processes and high-end management tools to manage the project in the best way possible.

Moreover, with their expertise in the subject, they can help you automate it, which saves a lot of time.

• Flexibility

What makes the outsourcing option stand out from the rest is the fact that it brings flexibility to functions.

Even before development, you get a lot of options to choose from. Then any given company has a lot of flexible hiring options, among other things.

These are some of the top benefits of IT outsourcing. And with this, we have come to the end of the blog.

Outsource To The Best

This is everything you need to know about trends in IT outsourcing in 2023.

Now, if you want to outsource your IT work to the best firm, reach out to Nimble AppGenie, the best web, mobile app, and software development company based in the United States of America, North Carolina.

We have years’ worth of experience and the right resources to bring your idea to reality.

Niketan Sharma

Niketan Sharma is the CTO of Nimble AppGenie, a prominent website and mobile app development company in the USA that is delivering excellence with a commitment to boosting business growth & maximizing customer satisfaction. He is a highly motivated individual who helps SMEs and startups grow in this dynamic market with the latest technology and innovation.