This article was updated on 26 March 2021. Software development outsourcing has become a commonplace practice of hundreds of companies, from small family firms to huge international corporations. This approach to software development reflects the growing globalization of the workplace…
10 Top IT Outsourcing Trends in 2021. What to Expect?
What are the current outsourcing trends? That is a million-dollar question that needs a panoptic response. But there’s one thing we all know for sure: IT outsourcing is gathering steam, introducing irreversible changes to global businesses.
This statement isn’t mere rhetoric. Let’s delve into outsourcing statistics to back up this courageous testimony. According to Statista, global spending on IT services is projected to hit over 1.1 trillion U.S. dollars by 2021 worldwide. This figure represents a growth of 9 percent from the previous year which is a potential impact of the coronavirus.
Whatever the reason for the unexpected surge, an increasing number of global businesses will be looking to leverage an IT outsourcing partnership or lead the pack for IT outsourcing as providers themselves.
With that in mind, here is the heat index of IT outsourcing trends for the year 2021.
Hot IT Outsourcing Trends In 2021: What Are They?
Cost-effectiveness is a new trendy
Mind the talent gap
Software outsourcing is going east
Work from home is no longer a temporary experiment
Rebooting risk management during COVID-19
On cloud nine
Robotic process automation rides the COVID-19 hype train
PWAs – avid attendee of outsourcing trends
Cybersecurity is top of the mind
Outsourcing blockchain technology
Let’s address the elephant in the room: it’s always about the cost and profit. The stats provided by Deloitte attest to the fact that companies are pursuing better value for their money in 2021. Thus, as much as 70% of clients place the cost of IT outsourcing at the center of their decision-making process.
Historically, the main objectives of outsourcing have shifted from reducing operating costs to increased speed to market and higher flexibility every now and then. But today, cost-cutting is making a comeback as one of the leading outsourcing trends.
The fallout of the global pandemic was not the least to impact the figures.
Therefore, the volatile economic environment is stamping the focus back on the numbers. Even if the cost may not have the last say, it’s certainly accountable for the initial impulse. So that was number one of our hottest outsourcing trends.
Talent crunch remains among the most concerning outsourcing trends in 2021. Looming skill shortage spans the industries, and makes outsourced development a core strategy to address the needs. As the data by KPMG suggests, talent shortage continues to plague businesses despite the high number of fledgling developers. Left unchecked, that skill gap could result in a monstrous number of unrealized annual revenues.
Not to mention, that the demand for enterprise mobile apps is forecast to rise at least five times faster than in-house IT organization’s capacity to deliver them. That is why businesses will be increasingly searching for tech partners to increase their magnitude.
The overlooked potential of outsourcing in Eastern Europe is no longer under the radar. This region is becoming an increasingly appealing location for outsourcing services and for a good reason. IT outsourcing in Ukraine, for instance, presents a formidable competition to established tech spots. High-quality specialists and diverse expertise as well as competitive prices and business paradigms of responsibility led many to find the labor in Eastern European countries.
According to a recent report “Software Development in Ukraine, Poland, Belarus, and Romania”, IT service and Software R&D markets in the region are expanding 4-5 times faster than in other parts of the world. And this trend in outsourcing is set to keep up this year.
COVID-19 was a tipping point for the global adoption of work from home practices. Today, more than half of the U.S. workforce holds a job that is compatible with remote working. And chances are high that around 25-30% of employees will work remotely multiple days a week by the end of 2021.
Moreover, the pandemic times offer unique insight into how well alternative work arrangement works, and may reshape the long-established pattern of working hours. The new normal also reduces the fear factor associated with work-from-home employees, thus putting a new face on IT outsourcing as well.
Today, business owners no longer shun the remote hiring option just because employees are based outside the in-house working space. The business world got used to a virtual way of working and to managing the remote workforce.
COVID-19 has vividly demonstrated how ill-equipped many organizations are in the face of the unknown. Sadly, a nice amount of companies couldn’t stand up to challenges brought along by the new reality due to poor risk management. This includes financial sustainability measures, emergency communication, training on technology to work remotely, and others. Therefore, risk management has been brought to the forefront of business operations.
On that note, outsourcing has demonstrated the upward trend in helping businesses combat the inertia and put their risk management to rights. Remote hiring is what can take the blows and facilitate decisions that will minimize the adverse effects of risk. Whether these are changes in workforce, acceleration of digitalization, or cost-effectiveness to remain viable, outsourcing provides an unlimited amount of opportunities to heal in pandemic times.
Globally leveraged cloud-based services are among other top outsourcing trends this year. Also, the confluence of existing factors driving the cloud revolution has been further reinforced by the pandemic. According to Statista, the global public cloud computing market continues to expand and is expected to grow up to more than $390 billion in 2022. As traffic is pushed off corporate networks and into the cloud and tech services partners are reducing client risk through cloud road-mapping, this IT outsourcing trend is here to stay.
However, despite a large number of cloud-first companies, lots of businesses lack the experience or in-house capacity to realize the full benefits of this technology. Therefore, along with private cloud service providers like Azure, companies will also actively engage vendors who provide ready software cloud-based solutions or cloud transformation.
The rising trend in RPA automation is projected to continue through 2021 with double-digit rates. Companies are pursuing RPA to clear the way for future growth, through an agile, robotic labor force. Also, the COVID-19 aftermath will most likely be eliminated through automation.
According to employers, their personnel experience operational difficulties due to automation and stress brought along by the pandemic. With that said, 75% of the companies reported using robotic process automation to support the remote workforce.
Although the unrivaled benefit of cost-friendliness is still the main motive power in outsourcing solutions, there are a whole host of other reasons behind RPA hoopla. Improved business results, flexibility, reduced risks, and powerful analytics are just the tip of the iceberg that underpins the phenomenal growth.
Progressive web apps are now leading the way into the future for the web development world. They allow developers to combine the best of the web and the best of native apps, thus eliminating the need for building native applications for every device.
Also, PWAs use relatively limited space and can operate on low internet speeds as well as in offline mode. This technology has redefined user experience and made it to the top favorites of organizations that advocate a mobile-first approach. These factors will continue to drive the worldwide PWA market exponentially and increase the demand for outsourcing PWA development.
Just like with other weak points, the coronavirus outbreak happened to become a litmus test of poor cybersecurity practices. Despite this rise in technology demand, it is evident that many companies still do not have a cyber-safe remote-working environment.
Increased exposure to cyberattacks at times of increased digitalization is a major concern as we’re stepping into a new decade. That is why outsourced cybersecurity is among the most sought-after outsourcing trends in 2021.
More than 80% of IT leaders are looking to outsource their security to a managed service provider in 2021. Along with COVID-generated issues, an ever-mounting amount of data is what also prompts organizations to fortify their walls. As data-driven insights are becoming new oil, more companies will be forking out for advanced security measures to ensure GDPR compliance.
Blockchain development is touted to be one of the most demanded skills for 2021. According to Statista, global spending on blockchain solutions is expected to reach $19 billion by 2024. However, the heavy demand doesn’t come complete with available human resources in-house. Especially now, when the information technology industry is desperately crying out for a new talent that knows the ropes in this field.
Hence, all sorts of industries are in the market for outsourcing vendors with a qualified team of pre-vetted blockchain experts. Besides financial gains, a diverse set of skills needed for this technology is also the main driver for delegating blockchain development. Thus, to build a viable distributed ledger technology solution, the development team needs to possess a profound knowledge of cryptography, security and encryption, IoT, SaaS, and others.
How Outsourcing Practices Are Changing?
In the past years, the world has changed beyond all recognition. Whether it’s technology, healthcare, or the financial sector, the COVID-19 has left most businesses counting the costs and seeking a viable solution to stay aboard. Digital transformation is what can contribute to business longevity and help battle the economic repercussions.
Although this digital mandate isn’t new, a tech talent cannot keep up with the rising technologies.This encourages companies to go in search of outsourced minds past their office doors. In 2021, businesses are looking for outsourced partners to share risks and set digital overhaul in full gear.
Thus, blockchain, RPA, and cloud technologies can be spotted among outsourcing trends for this year. And as the new reality is pushing businesses out of their shells, remote work, risk management, and enhanced cybersecurity are to stay in IT outsourcing industry trends in the foreseeable future as well.
Embracing cutting-edge technologies is half the battle. But finding the right outsourcing partner can become your winning bid. Talk to our experts and find out how you can make your business future-proof.