By Leehee Gerti, VP Marketing at CodeValue
The global IT outsourcing market is projected to reach USD 407.29 billion by 2023, according to a new report by Grand View Research, Inc*. This growth will be driven mainly by increased demand for cloud-based services, automation of business processes, and other cost-saving benefits. Furthermore, the increasing adoption of Internet of thing (IoT), artificial intelligence (AI) and machine learning (ML) technologies are expected to provide a significant boost to the IT outsourcing market.
In addition, the increasing adoption of open-source software, the growing need for application modernization, and the rising demand for data privacy and security are expected to further fuel the demand for IT outsourcing services in the near future.
Outsourcing gives companies a competitive advantage by reducing operational costs, enabling staffing flexibility, and saving time. Because of these benefits, more companies opt to outsource business processes, prompting outsourcing market growth.
Here are the key trends to watch out for in 2023:
Strategic partnership – Companies now believe a strong strategic partnership with fewer outsourcing companies can ensure business continuity and operational cost savings. A singular (or fewer) outsourcing partner enables stronger business relationships, increases transparency, and induces trust which, in turn, makes reaching objectives easier. Additionally, companies can ensure continuity with an outsourcing partner through a more extended outsourcing contract.
Global delivery – in an analysis published by Deloitte they state that following the Covid pandemic more and more companies are prompted to adopt flexible working methods. The necessity to be agile, the ability to find the specific talent and expertise wherever it is – because in the new world, geography carries no weight. Another study by Gertner reveals “Talent Shortages as Biggest Barrier to Emerging Technologies Adoption”. With the Global delivery approach, the ability to work with the best experts from anywhere and at any time opens the game and expands the bandwidth of relevant players.
Modern Technologies – as the old saying goes “do what you do best, outsource the rest”, this saying stand its ground with software development as well. An outsource service provider is an expert in their specific field. As a result, they’re more likely to update themselves about the advancements in technology than an in-house team.
Startup surge – Outsourcing allows small businesses or startups to access the best talents and tools at economical prices. These businesses outsource repetitive tasks to save time and money. Small companies are also less likely to have experienced employees due to their limited payroll budget, and outsourcing enables them to access the best talents.
Go east (Europe) – Revenue in the Eastern Europe “IT Outsourcing” segment was projected to reach US$2.69bn in 2022. And revenue is expected to show an annual growth rate (CAGR 2022-2027) of 17.17%, resulting in a market volume of US$5.94bn by 2027****. Companies in North America like the United States prefer East European countries, like Romania, Ukraine, Poland, and Belarus, for IT outsourcing due to their proficiency in English and cultural similarity.
Also, Eastern Europe has a high percentage of skilled people (including tech professionals), affordable talent, and strong data security.
To conclude, outsourcing IT projects in 2023 would be a wise decision for companies who want to save on costs, benefit from access to a global talent pool, and take advantage of the latest technology. Companies should carefully evaluate and compare their options, and select a vendor that can provide reliable, secure, and high-quality services. Doing so will ensure that the project is completed on time, within budget, and with the desired results.