Looming recessions are creating a sense of uncertainty for midmarket technology companies. As a result, businesses that never considered outsourcing some or all of their software development efforts are doing so now to support their go-to-market strategies. Software development outsourcing is an emerging hot trend because it enables companies to speed up product innovation and cut costs, especially in uncertain times.

The high demand for developers and IT specialists of various profiles, digital transformation, and technology development makes outsourced software development a popular service for business. This service is highly relevant for global corporations, small businesses, and minor startups. Software outsourcing refers to an approach that allows an organization to work with a third-party team of developers from an external agency. This enables the business to complete all the tasks in their software development project . In short, software outsourcing is a practice or arrangement that allows an organization to transfer some of the business processes to a third-party vendor.

Expanding IT Outsourcing Hub in Eastern and Central Europe

Nearshoring offers several benefits, including lower costs, faster turnaround times, and easier communication. By partnering with nearshore companies, small businesses can access the expertise they need to grow their businesses without breaking the bank. This trend is expected to continue as small businesses seek more cost-effective ways to stay competitive in the global marketplace. Interest in IT outsourcing is growing thanks to accelerating digitalization, the wider use of enterprise applications, and the increased popularity of home office setups.

software outsourcing statistics

In fact, in many developed countries, an increasingly large percentage of professionals are turning to independent freelance work, adding yet another dimension to the outsourcing landscape. The pandemic and the “Great Resignation” pushed more Americans to start freelancing in 2021. This number will likely grow, as 56% of non-freelancers say they’re considering freelancing in the future.

Current statistics on this topic

Organizations around Europe invested around $26.5 billion into IT services and business services back in 2021. Statistically, this is the highest annual spending that’s ever been recorded. Additionally, around a third of the respondents stated that they were going to increase their outsourcing requirements in the IT sector. Approximately 18% of respondents said that they used outsourcing as a way to gain access to expert assistance and improve available skill sets. Highly likely reasons for this include budget concerns, privacy standards, and a lack of control over security. By now you should have a much better understanding of why companies outsource.

Artificial intelligence was created to minimize human time and efforts in completing routine tasks. The COVID-19 changed all business branches’ work tasks, and the IT-sphere was not an exception. According to Global Workplace Analytics, by the end of 2021, 25-30% of the employees will be working from home. After researching providers online, make a shortlist of the providers that appear to be potential candidates for the position. Narrowing down the choices allows you to get in-depth with your search. Your list should consist of about 2 to 4 outsourcing companies and indicate their suitability for the project.

Must-Know Outsourcing Statistics for 2023

The IT industry certainly leads the way with application hosting and software development services. Apart from that, outsourcing is also used in HR and payroll management, manufacturing, and various Government needs in the US. Of course, this doesn’t include just payroll management but also workforce administration, health & welfare benefits, and time & attendance.

software outsourcing statistics

For instance, IKEA Furniture Company (a Swedish giant firm) is committed to implementing smart home projects through their Home Smart initiative. It needs to work with a team of dedicated thinkers with access it outsourcing trends to the necessary resources and cutting-edge tech to achieve this dream. These outsourcing services are not as prominent as those in the three main markets, but they’re becoming increasingly relevant.

HR consulting is the most common service among HR outsourcing organizations.

Build the right skills, focus attention on critical business areas, and set up your teams for success. Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, https://www.globalcloudteam.com/ tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes. Hopefully, our outsourcing statistics, as well as our general overview of global outsourcing companies, satiated your curiosity and gave you more insight into how the outsourcing market works.

software outsourcing statistics

Offshore software development is growing more popular, especially in the light of the global events reshaping markets and industries. Usually, outsourcing software development is more cost-effective than hiring an in-house team. With outsourcing, you do not have to incur additional costs on training, onboarding, or pay full-time salaries. Additionally, outsourcing in developing countries with the necessary resources such as Vietnam, Ukraine, or Poland gives you access to a pool of talent at lower costs.

The best time for using Software Outsourcing

Additionally, cloud-based services are beginning to close the gap on traditional outsourcing requirements. A 233% increase in sales has been noted when compared to previous years. Moreover, in 2021, as-a-service outsourcing contracts have increased in value by 41%. Namely, approximately 83% of companies that have an in-house security team are currently considering outsourcing some of their security efforts to managed service providers.

Hiring a remote developer to handle the project offers a more affordable alternative to bringing a product to a market-ready position. The study reveals that a significant 36% of the US workforce is now working remotely all the time. This statistic highlights the growing acceptance and adoption of remote work by employers and employees alike, as well as the technological advancements that have made it possible.

The MSP market is to reach $41 billion by 2022 due to outsourcing security functions.

Uncover insights into global trends, cost savings, and future predictions. While outsourcing is likely to continue growing, the functions that are outsourced and the companies that rely on outsourcing may change. Operations are generally moving in-house, while key sectors like software development and maintenance remain outsourced. Today outsourcing has become a way of life for many small businesses and large firms. As of 2020, there were 1,847,900 jobs in these three occupations in the US, and with a projected growth rate, there will be 409,500 more by 2030. Numerous industries use outsourcing to find outstanding talent overseas.