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Top Six Trends in IT outsourcing: An Overview of the Enterprise Market.

With the growing demand for creating world-class digital products, the IT outsourcing industry is multiplying. Customers are looking for reliable software development partners who can provide technical support and highly specialized knowledge and expertise.


According to a report by Statista, spending on IT services is expected to reach a record $1.1 trillion by 2020. To reduce development costs, build a professional team and improve time to market, companies outsource software-related tasks to third parties. As this approach offers many advantages, it is becoming increasingly popular.

 Statistics predict that the global software application outsourcing market will grow from $89 billion in 2018 to $96.7 billion in 2021. Techno analysts say that business process optimization is one of the main reasons for the market's rapid growth.


Why are companies outsourcing software development tasks?

Clutch, a leading B2B assessment, and analytics platform surveyed 529 small business owners and managers in the US to determine why they outsource tasks. Here's what they found:

Businesses are most likely to outsource more technical tasks in accounting (37%), IT services (37%), digital marketing (34%), and development (28%).

 The main reasons for outsourcing are improved productivity (24%), increased specialization (18%), greater flexibility (16%), freeing up staff for other tasks (15%), and greater availability of resources (12%).

 Reducing operational costs is only the sixth reason for hiring an external IT service provider (12%). In 2016, it was the top reason for outsourcing software development (according to Deloitte's 2016 Global Outsourcing Survey).

 Companies with 50 or fewer professionals (29%) are less likely to outsource than organizations with more than 50 professionals (66%).

 Because the IT outsourcing (ITO) market spans multiple regions, you can access talent in various disciplines and technologies. There are no regional restrictions, making it easier to find a bespoke software development company that fits your project, including cost, time zone, culture, technology stack, and experience.


Top six IT outsourcing trends in 2021 


1. New priorities: value over price

Whereas companies used to outsource software development primarily for cost reasons, they look for greater efficiency, better processes, and highly skilled professionals. While competition among IT service providers in different regions increases, most are striving to produce step solutions.


2. Eastern Europe is one of the several popular offshoring objectives.

According to the record "Software Development in Ukraine, Poland, Belarus, and Romania in 2019", currently 70% of the market for IT outsourcing services comes from the US and Western Europe. India,  South Africa, Brazil,  Eastern Europe, and China are the top 5 regions to meet this demand.

Eastern Europe is becoming a popular destination because of its wealth of experience and in-depth knowledge. The countries mentioned above prove to be a growing, highly competitive, and attractive source of IT talent.

They generate more than $13 billion in annual revenues and $5 billion in revenues for the 477 companies in the study. Interpreters also found that the market here is growing four to five times faster than the rest of the world, with the United States and the European Union being the primary consumers. One of the main goals for this is that European countries provide a favorable environment for the IT industry. Some of them also enjoy strong government support.

 Belarus is an excellent example of this. Created in 2005, the High Tech Park is recognized. Representing one of the front clusters in Central and Eastern Europe, HTP promotes high-quality software engineering by creating a unique business and tax environment. In Artesia, we are proud to be residents of HTTP.

 On 21 December 2017, Belarusian President Alexander Lukashenko signed the decree "On the development of the digital economy," which legalized chain-based businesses. According to the law, natural and legal persons have the right to conduct transactions with cryptographic currencies.


3. Smaller companies are outsourcing more

Because IT outsourcing allows to reduce costs, hire a professional team, and not worry about personnel issues, start-ups and small companies are increasingly resorting to outsourcing.

However, large companies and even corporations are also delegating their projects to external IT service providers. Given the growing need for sophisticated and innovative AI, Blockchain, IoT solutions, this option is becoming particularly preferable for many organizations worldwide.


4. Growing demand for offshore outsourcing

 Customers are increasingly delegating software-related tasks to IT service providers located close to their business. For example, a UK digital marketing agency is hiring a team of experts from Belarus. With a time difference of around 2-3 hours, both parties benefit from smoother communication and a more convenient workflow.

 Outsourcing software development abroad remains popular in the US and Australia, while cooperation with companies abroad is declining. Also, companies located in these countries are more likely to choose Eastern Europe because they have more experience, extensive technical knowledge, and speak good English. Also, most of them are ready for the customer's working day.


5. New contract models and shared responsibility

 Analysts from the National Outsourcing Association have revealed that creating new contract models is one of the ITO's critical areas of focus for 2020-2021. This year, agreements between clients and software development companies will be more focused on project results. All key performance indicators will be negotiated, approved, and included in the contract.

 Also, reporting periods are expected to be shorter. By sharing responsibility for the product's success, IT service providers will become the right strategic partners. As customers will choose the supplier that offers the best results or takes the most significant risk, competition between IT companies will intensify.


6. Implementation and system integration

 Creating a customized software system takes a lot of time and effort. It often involves integrating it with the customer's existing applications and ensuring a seamless interaction between the two.

For example, you want to create a CRM solution to track leads, contacts, payments, sales, and marketing activities. If you do not want to invest resources in implementing task scheduling functionalityArticle Search, you can link the CRM to your organization's task management system.



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I'm Olivia Cuthbert and I am a Sr. technical consultant and writer working for PixelCrayons. I am passionate about exploring and writing about innovation & technology and have been in this field for 4+ years.

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