The practice of IT outsourcing has its origins in the 1980s and 1990s when companies like Kodak began outsourcing parts of their business processes to find cost-effective solutions. Over the past thirty years, outsourcing has evolved into a common strategy for businesses seeking not only time and cost savings but also access to skilled professionals and customized solutions.
Today, outsourcing is about more than just cutting costs. Companies increasingly use it to gain a competitive edge by addressing expertise gaps and overcoming technological challenges. Outsourcing allows businesses to transcend geographical limitations and tap into specialized skills available worldwide.
Outsourcing Industry by the Numbers
The outsourcing market is currently at an all-time high and shows no signs of slowing down. The statistics speak for themselves, highlighting the market’s impressive growth and widespread adoption.
Here are some key numbers showcasing the state of the outsourcing industry:
- 92% of G2000 companies use IT outsourcing, according to IGS.
- Executives have identified cybersecurity as their top external challenge. In 2022, 81% turned to third-party vendors to bolster their cybersecurity capabilities (Deloitte).
- The Global IT outsourcing market size is projected to reach $1.18 trillion by 2030 (Grand View Research).
- In 2023, global spending on IT services was projected to be around $1.42 trillion (Statista).
- By 2024, the revenue of the outsourcing market is expected to hit $512.47 billion (Statista).
- The three largest areas of outsourcing are web hosting, administration, and application outsourcing (Statista).
Key Trends in IT Outsourcing
Thanks to new technology, outsourcing is becoming a vital tool for businesses to cut costs without sacrificing quality. This is especially important during hiring freezes and budget cuts, allowing projects to be completed efficiently and scale as needed.
So, what are the upcoming outsourcing trends, and how will they impact you? More importantly, how can they benefit your situation?
Here are the top ten IT outsourcing trends that could transform your business processes:
The Future is Data-Driven
As companies adapt to new business norms, data analysis becomes crucial. During layoffs, effective resource management and predictive analytics are proving essential. In an uncertain business landscape, data-driven decision-making (DDDM) will be key to making smart choices.
The strategy will often involve saying no, but data must support these decisions. Many businesses will look to third-party providers to meet their evolving hiring and expertise needs. This ensures they are addressing immediate challenges and making data-backed decisions that align with their long-term goals.
Artificial Intelligence is Taking Over
AI is not just another trend; it’s at the forefront of the technological revolution. Artificial intelligence and machine learning (ML) will become indispensable in various business processes, from predictive analysis and customer service to software development.
As the demand for time savings and operational optimization grows, the ability to incorporate AI and ML will be a key factor when choosing outsourcing partners.
Robotic Process Automation (RPA) to the Rescue
The robotic process automation market grew by 22% in 2022, according to Gartner, indicating its early maturity. RPA will continue to gain momentum as it allows core teams to focus on critical business areas by taking over tedious, repetitive tasks. From back-office operations to testing and data migration, RPA offers the potential for hyper-automation, making it a valuable efficiency booster for software engineering teams.
Cloud-native and multi-cloud outsourcing services are gaining popularity.
Cloud computing is not new to tech-savvy businesses. Utilizing cloud services enables companies to scale and respond to increasing market demands. As multi-cloud strategies gain traction, the role of cloud services in IT outsourcing will grow, especially in risk management and enhancing redundancy.
Hybrid is the Way to Go
Not all businesses will fully commit to cloud computing. For many, a hybrid infrastructure will be the best approach. Hybrid outsourcing will become more common, offering the best of both worlds: data security and protection against cyber threats, along with the scalability of the cloud.
Low-code software Development Drives Business Growth
Adopting low-code techniques enables businesses to automate processes and deliver products faster. The global market for low-code platforms was worth nearly $22.5 billion in 2022 and is expected to grow to around $32 billion by 2024, according to Statista.
Gartner predicts that by 2025, 70% of enterprise applications will be built using low-code or no-code technologies, a significant increase from less than 25% in 2020. With the increasing demand for low-code solutions, more companies are looking for outsourcing providers that offer low-code capabilities.
AI-driven experimentation and PoCs for Competitive Advantage
Building at scale is out; experimenting is in. Developing proof of concepts (PoCs) instead of full-blown products is the way to go in 2024. Testing the market with minimum viable products (MVPs) minimizes the risk of investing in solutions with little or no real value. Outsourcing providers can expect more experimental projects, especially those involving AI-driven technology.
Co-Pilots as Professionals’ New Virtual Assistants
AI-driven co-pilots are set to become essential tools for streamlining product design and development. Research shows that using AI as a software development assistance tool can boost productivity by about 55.8%. Faster UI prototyping will also improve the efficiency of UX and UI teams.
The time and cost savings from introducing co-pilots will significantly impact the outsourcing industry. For instance, Netguru’s experimentation with AI-powered tools like Locofy has shown a 3x faster turnaround in development.
XR as the Next Big Thing
Extended Reality (XR), which combines augmented and virtual reality, is set to become a key player in the evolution of the metaverse. XR will be crucial in the gaming, retail, health, and training sectors.
The launch of the Apple Vision Pro has sparked interest in spatial computing, and outsourcing companies offering XR expertise will be invaluable to businesses looking to enhance customer experiences.
Sustainability in the Spotlight
Going green is becoming increasingly important for both outsourcing businesses and consumers. It’s not just about complying with regulations like The Green Deal Industrial Plan; it’s about being environmentally responsible.
Outsourcing service providers are looking for ways to make their operations greener, from encouraging remote work to introducing green technologies. Responsible practices, energy-efficient infrastructure, and greener IT solutions will be key factors in achieving sustainability objectives.
Maximize the Benefits of IT Outsourcing Trends
Cloud services, AI, RPAs, and machine learning are bringing positive changes to the outsourcing market. In today’s challenging economy, these technologies can give businesses the competitive edge they need.
Over the past year, we’ve seen rapid advancements in AI solutions, showing that technology is progressing faster than ever.
To stay ahead, businesses should keep up with outsourcing trends and work with reliable software development companies. This will help your business stay flexible and adapt quickly to changes in the environment.
