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.

By Leehee Gerti, VP Marketing at CodeValue

A melting pot. A land of refuge, the only homeland for people of Jewish heritage. That is what modern-day Israel IS. It’s been 30 years since the last big wave of “Aliya” (immigration to Israel) when over 1 million people from the former USSR made their new home here in the land of milk and honey. Education, science, creativity, and innovation have been the cornerstone of the new founded land straight form its inception, that is true enough, but what that wave of Aliya brought with it is a different culture that sanctifies hard work, uncompromising compliance with goals, and deep exploration.

The merger between the two, the method versus ad-hoc, the planning versus “it’ll be okay”, these have made Israel a global high-tech super-power and one of the strongest economies in the world.   

The war in Eastern Europe presents us with a new challenge, a potential pool of tens of thousands of people entitled to immigration under the “Law of Return”. A genetic and cultural repository similar to that of the immigrants of the 1990s. If we are smart enough to prepare properly, embrace, understand the difficulties and provide a quality integration infrastructure – the potential benefits are massive.

When the 1990’s immigrants entered the Israeli labor market, their labor productivity fell. This is because they – as with any immigrant – suffered from the “Kuznets effect”. Simon Kuznets, a well-known Jewish economist from Harvard and one of the first to calculate the GNP, found that when immigrants arrive in a new country, their earning capacity drops by 50% to 70%, and it takes them 20 years to return to earning level that is appropriate to their level of education. 

We do not have that time nor privilege.

In the last year or so, we’ve been experiencing a massive workforce shortage in the Israeli high-tech industry. It is estimated that there are anywhere between 10,000 to 25,000 open development positions waiting to be filled. 

Many companies have put a lot of effort into narrowing the gaps between what is required and what is available. At my company CodeValue, for example, we conducted several Techboost rounds in which we identified and recruited people with potential and love of tech’ but lacking sufficient experience – and trained them in modern technologies to suit current market requirements. 

Such initiatives need to be replicated and adapted in order to accommodate the potential immigrants from Ukraine and Russia. High-tech companies and other prominent employers need to join hands with government organizations and NGOs whose goal is to promote immigration and integration. Let us map out the needs of the immigrants, their abilities, and professional aspirations and at the same time establish a unified system that will incorporate specific jobs and open positions that may suit the immigrants’ professional interests, language, and culture. We need to shorten processes, streamline procedures, and get going… fast.

History presents us with a unique opportunity. Rare coincidence complied of global epidemic aftershock – which has pushed forward the digital transformation revolution, A country that has put its trust in the high-tech industry, and a well-educated, hard-working workforce looking for a new home to thrive in. 

By Leehee Gerti, Director of Marketing at CodeValue

In recent months, the media has been buzzing with news items about huge salaries and dreamy working conditions in the Israeli high-tech market. Highways sidelines and the entrance to High-tech industrial parks have become a billboard war zone, the TV ad breaks are dominated by the industry giants, radio broadcasts, International DJs perform in rooftop parties. What the hell is going on here?

Welcome to the jungle. Here, too, the strong will survive and by survival, I mean – succeed in recruiting talents to expand its workforce and meet the ambitious development goals to which it committed in the last of IPO. We are only at the beginning of the post-corona era and perhaps it is too early to reach conclusions about the lessons and processes that this plague has taught us. But one fact stands out and cannot be disputed – the corona plague has caused an unprecedented wave of technology adoption by businesses across all spectrums of the industry.

There is a lot of money in the market, and it is flowing directly to high-tech companies. They in turn formulate ambitious development goals and desperately need working hands that will write all this code. In other words, companies dealing with wage inflation in the super-competitive field. Established and Unicorn companies with gigantic budgets are pushing up the entire market. These terrain conditions combined with the characteristics of the Millennials/X/y/Z generation (and whatever comes after), creates a ticking time bomb.

“What is the problem?” “The time has come for the power to be in the hands of the workers and not of the corporates.” “If there is a lot of money in the market, it is better for it to reach the last link in the chain – the employee.”

This is all true. But..

As in any industry, the big, rich companies are at the front. But the locomotive that pulls this train forward is the medium and small size companies. Israel is a startup super-power, from these initiatives comes innovation and technological creativity, how long can they stay in the game when the basic conditions become so difficult? The entire industry needs to understand that until we can fill the ranks by investing in infrastructure, technological education in the periphery and encouraging employment in marginal sectors, there is an immediate need to change the conditions of the game. Here are 3 (well tested) ways to maximize the workforce and meet business objectives:

• Expanding employed ad-hoc – creating condensed tech’ bootcamps (here at CodeValue they are called Techboost). Locating and recruiting employees with some technological background and high independent learning abilities and training them, by experts, in modern and required technologies. It really does work, we at CodeValue are already in the third cycle of exactly this type of training and all the graduates are already employed in our various projects within the best companies in the market.
• Widening R&D departments with organic teams – Companies that provide development services have qualified and available manpower and a layer of experienced tech’ managers who can provide an immediate solution to meet development goals. An organic team derived from the dev’ services company, receives a development task from the client and fills it in to its completion. The customer, on the other hand, is not required to locate, recruit and train employees, which is time-consuming, nor is it required for administrative and logistical management. It only receives outputs without the unnecessary fuss.
• Hybrid offshore – This is not a new idea, many companies turn to hire the services of dev’ teams/individuals from the developing world (Eastern Europe, Asia). Many companies have tried and burned since the quality of code is not always at the required level and the language and cultural barriers are also extremely difficult to surpass. The hybrid solution addresses exactly these pain points. We are talking about an Israeli team leader, an expert in his/her field, who directly manages and professionally guides the foreign development team that was handpicked and carefully trained by him/her. This skips over the failures of managing a foreign and remote team and manages to reduce the time to market significantly.

Times are challenging and great power can be intoxicating. Remember how we were really scared just a year and a half ago? That there was uncertainty in the market and many companies were quick to “release” their employees? 40+ industry veterans also remember the .com era at the turn of the century. On that time too the market seemed to play into the favor of the worker, but then the bubble bursts or the plague erupts and the companies that chased after you and wrapped you with pampering benefits are turning their backs and leaving you behind. So, when the skies are blue and no cloud in sight, it might be a good idea to buy an umbrella?

CodeValue, founded in 2010, is a services company delivering architectural and technical expertise and in-depth consultancy. CodeValue integrate product & design research in our development process, provide managed software and cloud solution, and offer customized training programs to bridge knowledge gaps.