10 Software Outsourcing Trends to follow [Updated]

Last updated on September 22nd, 2023

Software Outsourcing Trends, IT operations and functions are becoming more popular among firms. The number of firms outsourcing IT is increasing. In 2019, companies spent $3.8 billion on IT outsourcing, according to the Gartner report. The trend is likely to stay here for a long time and continue in the future. For companies to succeed in digital transformation, partners and tools are essential. It isn’t easy to build tools internally with the speed and accuracy they need. 

The innovations in IT have inspired firms to rethink their workflow. A digital transformation will result in increased revenues. The digital transformation frees employees for more creative work and brings up their best work on the table. Automation creates systems that enable customer service representatives to spend more time helping customers. In this way, they don’t waste time on manual processes or inefficient working methods.

Upcoming Software Outsourcing Trends 

Developing these tools in-house can be very expensive most of the time. A company does not have to hire a full-time team to automate some processes. It is possible to outsource the development of marketing automation tools, which allows the company to save money and start using the new tools sooner. There’s no turning back for outsourcing.

1. Spending On IT Will Increase Globally

There will be an increase in global IT spending. Global IT spending will increase by 4% in 2021 and by even more in 2022, according to many experts. An increase in outsourcing will accompany increased IT spending. IDC estimates that the IT industry will accrue revenues of $5 trillion by 2021, representing a 4.2% growth.

2. Expansion of Remote Work

There will be a growth in remote working, and more sectors will embrace it. Companies will have to organize their workflows differently. In the COVID-19 pandemic, remote work has resulted in increased productivity for many teams. Employers must accept this shift and embrace this new normal. Many companies have opted to hire remote workers since the pandemic began. Working from home had previously been seen as just an alternative. Due to the COVID-19 outbreak, it has become necessary for most people. 

With remote working entering the new normal, more sectors adopt the practice. As long as cost reduction remains a priority, many companies, including BPOs, will adhere to this setup. Furthermore, some workplaces lack enough space for all employees due to health protocols. There is nothing new about outsourcing, and a lot of services can be handled remotely.

3. There Will Be an Increase in Cloud Services

Services provided by the cloud will continue to grow. Many businesses find cloud services a great solution due to their low overhead and monthly payments. The company does not have to invest in expensive hardware upfront but rather can invest elsewhere with its resources. Cloud services have prompted companies to adopt them since they are flexible and scalable. By using cloud technologies, users can utilize information and applications available online.

In addition, cloud-based technology could simplify the outsourcing process since collaboration is an important aspect. The cloud-based platform enables employees to share information securely. A cloud-based system also allows teams to work remotely. According to Gartner, cloud spending surpassed all other IT spending in 2020 by 6.3%. It is predicted that cloud spending will grow 18% in 2021. 

Cloud-based technology could also help recover files rapidly in a disaster because data is a key component of the outsourcing industry. This would avoid lengthy downtimes, allowing business to continue as usual.

4. Specialization is in Demand Software Outsourcing Trends

In the process of technological advancement, it becomes more widespread. A new tool or technology is introduced every so often. The challenge would be to be able to know enough about all fields.

Because of this, specialization would be in demand. It would benefit both the business and the outsourcing company since qualified staff would be working on the project. Offering high-quality services to businesses could be provided by an outsourcing company with experts in several different fields.

5. Prioritize Talent over Cost

The outsourcing of software resulted in lower costs, greater access to highly skilled labor, and a headcount reduction. Companies look at more than just cost when choosing a software outsourcing partner these days, as talent within many cities is on the rise.

The services companies want include expertise in their industry, technical know-how, software development experience, security capabilities, and a strong social media presence. Software outsourcing companies can differentiate themselves from the competition by focusing on these factors. Pricing is no longer the most important factor in choosing a software partner, as it is not enough to attract new clients, and if companies lack all the components, they cannot compete with their direct competitors.

6. More Sales Will Be Generated By E-Commerce

During the pandemic, e-commerce was the only sector that saw substantial growth. Sales of online products have continued to grow after the pandemic ended. By 2024, online sales will account for 28% of all retail sales, according to Statista.

7. High Demand For Full-Stack Developers

There is a high demand for developers with full-stack skills. Their knowledge covers the entire application, from the front-end to the underlying technology and databases. Agile and flexible, full-stack developers are valuable because of their knowledge of applications and development. 

8. Artificial Intelligence Is Expected To Gain Popularity

E-Commerce will become even more dependent on artificial intelligence. AI will be increasingly prevalent in eCommerce and software development, from Chatbots to custom shopping suggestions. As a result, customer service agents are freed to deal with higher-level issues. Despite the increase in demand for artificial intelligence, not all companies have the expertise or resources to develop their software. This has resulted in an increased number of companies outsourcing their artificial intelligence projects. It includes hiring external software development firms to develop and implement artificial intelligence into their software. Furthermore, many companies are outsourcing machine learning-related projects as they require an in-depth understanding of the subject area that may not be available within one company.

9. Security is Being Given Increased Attention

New threats arise as technology evolves. Cyber-attacks have worsened in the wake of the pandemic, and the prevalence of cybercrime has increased more than 600% since the COVID-19 outbreak. Therefore, protecting data and other information becomes increasingly important.

To eliminate risks and ensure confidentiality of company data, BPO companies would implement multiple levels of security. In cybersecurity, we need to have a sense of urgency and respond quickly to the expanding needs we face. Businesses need to have a partner to ensure their security and provide the right services.

10. Analytics and Data Science in High Demand

A new generation of firms focusing specifically on big data and analytics has also begun to emerge, which indicates that this trend will continue in the next five years. To learn this area as fast as possible, companies will turn to software outsourcing companies specializing in developing these applications. There is also an increase in demand for data science services in outsourcing software companies.

Benefits of Software Outsourcing Trends

A well-established company can benefit from outsourcing software development for several critical reasons. Businesses can achieve their digital transformation goals while reducing risk and retaining a cost-saving approach when using this method, and companies are becoming increasingly aware of its advantages.

You may be wondering whether the quality, budget, and deadline of your project are at risk when considering Software development outsourcing services. In addition to considering every scenario, business owners should consider the advantages of hiring a software developer outside of their organization. When you outsource software development and work with a multidisciplinary team, you can reduce labor costs, improve development speed, and successfully execute temporary projects.

Benefits of outsourcing software development:

• Cost Savings

The financial situation of enterprises has become tighter than ever, and your development fees will be easier to manage if you utilize an experienced IT outsourcing company. Freelancers will save you time and money by eliminating your IT recruiting budget.

• Flexibility

Today’s executive teams must juggle several tasks and responsibilities. The fact that you will not need to spend a great deal of time recruiting, hiring, or training employees will allow you and your team to focus on the business-critical tasks you need to get things done.

Thus, more money can be invested in marketing, sales, and business development. In addition, you have the option of working on a project-by-project basis, meaning that you won’t have to hire your developers permanently once a product is complete.

• Time Savings

Digital environments are highly competitive, with little room for error. You can meet your brand’s challenges faster with a dedicated software development team with experience in agile methodology and high-quality project management.

• Keeping customers happy

A skilled outsourcing provider will make researching and identifying customer personas easier. By engaging in persona development, you will have a better understanding of your intended audience, which will enable you to develop software that your clients want. Apps and websites may not succeed if you do not know what your customers want, need, and expect from them.

• Scaling up team skills

With software development outsourcing, you can scale both the skills and the costs of your team as needed. The freedom to quickly add skilled professionals from other competency areas to your team – comes into play if your budget has to be allocated somewhere else or you suddenly need to grow your project team to achieve your goals.

• Delivery on time

It takes a lot of time to complete a full product development cycle. The time required for the development of an application is directly related to the scope of the project and the specific business needs. An app developed on a native platform or cross-platform hybrid platform can be created in a matter of months, but building a platform that uses AI and machine learning could take several years. The time-to-market of a project that would otherwise take a long time to develop with in-house teams can be accelerated greatly by outsourcing the project to a specialist firm. The process of hiring and onboarding a new employee can be a challenging process, taking a considerable amount of time. 

• One-Stop-Shop

Choosing a one-stop-shop vendor enables you to save time and money in outsourced software development. Even far from being best-of-breed, a one-stop-shop business model can help unleash infinite value across the project life-cycle by enhancing communication between the vendor and the client, gathering multi-faceted processes into one place, and providing developers with in-depth knowledge across technology stacks. One-stop-shop software outsourcing companies provide all the product development services under one roof, including workshop sessions, strategy sessions, user interface, user experience design, product development, and quality assurance testing.

However, some technologies have changed while others haven’t. As the industry changes, so will the technologies and techniques. Trends in outsourcing are constantly changing, making outsourcing more efficient. By doing so, your business would reach a wider audience and provide better customer service.

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Having a partner that stays up to date with new technologies is also essential for a business. Your business should be provided with customized services to meet your needs. It is important to remember that outsourcing providers must be open to changes and trends.

Frequently Asked Questions For software outsourcing trend

1.What are the top 5 software development outsourcing trends of 2023?

Given below is a list of the 5 leading outsourcing software development trends of 2023. Take a look – 

• Artificial Intelligence (AI) – 

Obviously, the swell in the use of artificial intelligence (AI) in the arena of software development has to be one of the leading outsourcing software trend

• Hybrid Outsourcing – 

Why go for only offshore or onshore outsourcing, when you can take advantage of both via a hybrid model of outsourcing?

• Security Mitigation – 

Of course, robust security measures in app development arena has to be a top priority in an era where data has to be earnestly protected

• Agile Development – 

In this fiercely competitive times, only agile development approach can build a high-quality app for you in lesser time than expected

• Data Science – 

Again, what is the use of gigantic loads of data if we cannot assess it continuously for business growth via the use of data science?

2. What are the software development outsourcing statistics?

Given below are the relevant statistics with regard to software development outsourcing. The companies looking to outsource software development must take a look – 

• The software development outsourcing industry has the potential to build $ 430.5 billion revenue by the end of the year 2023
• You must go for outsourcing software development as it can significantly cut short your cost by 60 percent
• If you talk about the growth rate, the outsourcing software development is expected to grow at a massive rate of 8 percent
• Of course, the USA is leading in software development outsourcing in terms of revenue it has generated
• As much as 30 percent of the companies in the USA outsource one or more tasks or the entire software development to another company