Spending on IT services is expected to reach a record $1.1 trillion in 2020, reported by Statista. But Do you ever wonder why the IT outsourcing trend is booming? Organizations outsource IT services for various reasons. Yes, Companies are delegating mobile app development tasks to third-party contractors because not only it reduces the app development costs, but also it improves time-to-market. Additionally, it helps you to hire a professional IT team. Since this strategy offers many conveniences, it is winning enormous popularity in the market.
Do you know? In 2020, 52% of small businesses stated that they’re willing to partner with remote tech engineers for their IT needs. Statista forecasts that in 2021 the IT outsourcing market’s turnover will grow to $96.7 billion from $89 billion in 2018. The main reason behind such rapid market growth is the business process optimization by Technavio’s analysts.
Hiring an Android/iOS app development company is tried and tested paradigms for a successful business. Over the last few years, this strategy is adopted by all types of businesses as it allows businesses to focus on their core business operations while saving money. Hence, we can say that the IT outsourcing trend is going to boom in the upcoming years. In this blog, we will share with you some of the IT outsourcing trends for 2020.
Before we jumped directly into this, we would like to share key Outsourcing Statistics.
key Outsourcing statistics.
- The contract value of the IT outsourcing market amounts to over $ 409 billion by 2022.
- As per Gartner’s estimation, the no. of computer specialist job openings will be over 1.4 million in 2020.
- According to Gartner, worldwide spending on IT outsourcing is projected to total $3.79 trillion in 2019.
- According to the Statista report of 2017, the most commonly outsourced function by IT leaders worldwide is a software application that is 64%.
- 3/4 of businesses give positive responses to their outsourcing partners.
- More than 50% of companies use third-party support to associate with their existing or potential audience.
- In order to boost outsourcing, 93% of companies have embraced cloud services.
- About 71% of financial service executives outsource any and all of their services.
Why businesses are rapidly adopting IT Outsourcing?
Though there are numerous reasons why companies work with the offshore development company, some of the primary reasons are
- Cut costs
- Enhance the quality issues
- Gain access to talent capital
- Expand business to a large extent
- Speed up organizational transformation
- Focus on core business increased
- Eliminates the capacity issues
- Improved Security
Top 10 Competing Countries for Outsourcing ( High to Low)
Based on the financial attractiveness, people skills & availability, and business environment, these are the name of some outsourcing destination that you must consider-
- India (6.95)
- China (6.49)
- Malaysia (6.05)
- Brazil (6.00)
- Indonesia (5.99)
- Thailand (5.92)
- Philippines (5.88)
- Mexico (5.87)
- Chile (5.72)
- Poland (5.68)
Types of IT outsourcing
Outsourcing, Nearshore Outsourcing, and Onshore Outsourcing, there are three major categories of IT outsourcing based on location. You can choose either of them that fits the best according to business functions.
- Onshore: IT outsourcing means getting the work done by companies located in the nearby region or the same area. The several benefits of onshore outsourcing are:- easy to control, the same timezone, no language understanding problem, and can be easily accessible.
- Nearshore outsourcing: It involves working with a provider that is located in countries having less or no timezone differences.
- Offshoring: This means Handing over tasks to a company from another country. It provides access to a large talent pool and specific expertise with a cost-effective advantage.
Here The Most Prominent IT Outsourcing Trends for 2020 and Beyond
Exploring new capabilities
When the question asked to both outsourcing clients and outsourcing providers about the significant reason for IT outsourcing. Do you know what they answered? 35% of respondents listing cost reduction among their top three reasons for outsourcing. Other key drivers are access to specific knowledge, expertise, and tools.
Undoubtedly, the reason for the growth of modern IT outsourcing is the vast no. of people are willing to outsource for their tasks. The reasons may vary. But the majority agree that the customer-centric strategy and exploring new capabilities are a way more appealing than cost-cutting
According to the report prepared by GSA UK, nearly 90% of respondents firmly believe that both IT outsourcing companies and their customers are heavily in favor of signing outsourcing contracts converged on outcomes and value in 2020+. All KPIs will be discussed, approved, and written in the contract. Besides, 69% of people said that outsourcing providers would work as systems integrators. It will involve sharing more risk with the clients. Only 31% forecasts that outsourcing providers would take all the risk on themselves.
Sustainable outsourcing: shared responsibilities
As organizations are increasingly under scrutiny for their sustainability efforts, this is becoming an essential component of the outsourcing contract. Companies are aware of their corporate social responsibilities and their impact on their brand and reputation. Many clients are careful to ensure the outsourcer follows their CSR directives and requirements.
More Small Businesses are Outsourcing
As IT outsourcing helps to reduce costs, access to specific knowledge, expertise, and tools, small companies and startups are more collaborating with third-party contractors. However, large companies and even corporations are also delegating their projects to outside IT service providers. Considering the burgeoning need for complex, innovative solutions associated with AR, VR, blockchain, AI, and IoT, IT outsourcing is the best approach for organizations worldwide.
These top IT outsourcing trends promise a bright future not only for large enterprises but also for SMEs. The COIVD-19 outbreak is making it challenging for businesses to manage and build software products in-house. Undoubtedly, this is the golden period for businesses to avail of the benefits of IT outsourcing. Do you want to be on the top in terms of innovation? Are you the one that lags behind IT outsourcing trends in 2020? Get in touch with us, and we will help you drive growth in your company.