We live in the age of the unprecedented development of technology. Global IT spending is expected to reach an astonishing value of $4 trillion at the beginning of 2021, according to Gartner. At the same time, Statista reported the revenue of the global outsourcing industry was 92.5 billion dollars in 2019 and estimated the rapid rise in 2020. Software outsourcing is shaping the global market, revolutionizing the way companies perceive their development, and bringing unrivaled opportunities to seize. That is why we have listed some highlights trends in outsourcing software development in the unprecedented times of 2020. So get ready for all the hype your company can benefit from.
If your business wants to implement emerging technologies as well, we recommend you to start following recent outsourcing trends and their influence on business management worldwide right now.
- What is software outsourcing and why is it trending right now?
- Top software outsourcing trends to follow in 2020
- Choosing a qualified partner for software outsourcing
1. What is software outsourcing and why is it becoming so popular in the global IT market?
The business world is characterized by constant changes. In order to meet the needs of a variety of clients, thus staying competitive, companies must keep a check on the market trends and implement new technological solutions. Hence, they are actively looking for new ways to optimize their processes and costs.
The software outsourcing industry is able to fulfill those demands, providing striving for innovative enterprises with a perfect solution, which supports their future growth and lets them compete with the giants. By implementing this model of cooperation, companies don’t have to develop an IT infrastructure on their own, invest in a variety of incompatible products, or struggle with a shortage of specialists.
Software outsourcing provides them with access to highly personalized products, fully tailored to satisfy their specific business needs. All that, to keep pace with the technology and reduce operating costs to a minimum. The growing influence of the outsourcing market is already visible now. According to Gartner, the demand for enterprise software development may reach 10.5 percent of all IT-related spendings, being one of the major trends of 2020.
The main goal of outsourcing is to increase the company’s efficiency. By delegating some tasks to an independent agency, an entrepreneur has more time for activities related to his core business. The contract is directed at a specific purpose or scope of work. Consequently, dedicated software responds to the real needs of the company – allowing the receiver to tailor them to their current business strategy.
IT outsourcing is not a mere trend, but an effective business practice that allows every company to benefit from a reduction in costs and the improvement of everyday work quality. It is especially vulnerable for small companies and startups – thanks to the participation of the specialists it stimulates the rapid development of brands and strengthens their competitive position on the market. Plus, instant access to the latest technologies can be a decisive argument in achieving a competitive advantage.
The advantages of software outsourcing
- The ability to optimize the costs associated with operating IT processes in the company. Outsourcing generates significantly lower costs – it allows reducing IT infrastructure costs by up to 25% while maintaining its high quality.
- Improving operational efficiency. Thanks to the rapid support of external specialists access to the best knowledge and IT solutions, the company can focus thoroughly on strategic tasks and enhance business effectiveness
- Maximized flexibility, allowing your company to quickly respond to the ever-changing market conditions in no time.
- Access to unique skills and resources. The outsourcing company adapts its scope of duties and activities to the client’s expectations, offering the help of many qualified specialists (or the entire remote team), and thus giving him access to a wide range of expert knowledge.
Growing competition in every industry requires a maximum focus on strategic activities for entrepreneurs, without unnecessary involvement of management in solving administrative problems. Appropriate facilities, including the entire IT area, are needed for the company to be able to quickly and effectively operate on the market and build a positive image among customers and business partners.
2. Top software outsourcing trends for business in the future
Software outsourcing trend 1: Asia Pacific – a new destination for software outsourcing
In the years to come, Asia Pacific would become the most promising destination for the outsourcing industry. According to GLSI 2019 by Kearney, 5 top outsourcing locations including China, India, Malaysia, Indonesia, Vietnam are all in the Asia Pacific. This movement would provide IT, service users, with more options when choosing IT outsourcing service providers. With the high-skilled developers and recognizable reasonable cost in comparison with other areas, the Asia Pacific including Vietnam software outsourcing would promisingly turn out as the destination for clients of IT outsourcing services and more specific software outsourcing services.
Software outsourcing trend 2: Quality takes over from price as the first priority
Customers in the IT outsourcing industry would be less price-oriented. It is undeniable that companies with more reasonable prices are still preferred. However, cost reduction no longer plays a decisive factor when choosing an IT service vendor.
Instead, companies nowadays tend to look for certain IT outsourcing companies which can provide trust, long term partnership, and add values to their organization. In the end, the most important thing is the quality of the deliverables. This requires more integration from the IT company to the services of their clients.
Software outsourcing trend 3: The relationship between the company and the outsourcing provider is shifting toward collaborating partnership
Companies tend to use the services of many specialized IT outsourcing providers. Currently, they place a stronger emphasis on the results of the cooperation, stipulating specific goals in their contracts – regardless of the service’s total price.
Thus, relations between the external software developer and the client’s representative are increasingly human-oriented, focusing on the quality of both cooperation and implementation, as well as simplification of processes – and not just the price. This leads to stronger competition among the outsourcing industry, which can translate into the higher quality of the final product. Hence, the most important thing for the IT outsourcing providers is to be a reliable partner, who understands well their client’s processes.
Software outsourcing trend 4: Software outsourcing is moving to Cloud
One of the most visible outsourcing trends of 2019 was the popularization of services available in the cloud. By its definition, cloud computing technology allows data to be processed and stored on servers outside the local network.
The most important advantages of this solution are the cost-efficiency and scalability, thus the ability to flexibly manage the server’s computing power. Both the high performance and security of cloud computing mean that this technology has more and more solutions available to support various business processes. As a result, the percentage of companies that migrate their whole environment into the cloud is growing year by year.
Software outsourcing trend 5: Not only practice for big companies
IT outsourcing is a unique opportunity for the sector of micro and small enterprises, which often face the need to reduce costs. At the same time, they want to have access to the latest technologies and solutions that allow for flexible management of business processes.
The ability to buy products in the subscription model directly from the vendors – from simple office packages, through accounting software to purchasing whole platforms – allows for significant cost optimization by stretching “installments” over time and paying only for functionalities that are actually being used.
Slightly different motives speak for the use of IT outsourcing in medium and large enterprises. This type of client prefers to order a full service, including the development of the dedicated system, as well as its implementation, maintenance, and compatibility with already existing business process management platforms, (such as CRM, or ERP).
Software outsourcing trend 6: Core business services outsourcing
It is expected that the relationship between software outsourcing service providers and customers will witness a spectacular improvement in status. It would become more and more trustworthy. Instead of just handing over the non-core services to a service provider, more and more companies now are outsourcing even their core business to outsourcing companies. This is both a chance and a challenge to the service provided. As mentioned above, the competition would be more rigorous and it would be hard to prove its expertise to customers. But, once the partnership is set, it would be much more fruitful and long-term.
Software outsourcing trend 7: Cutting Edge technologies
Automation is among the major IT outsourcing trends driving a revolution in the next few years. Virtual agents are more and more popularly used for daily routine tasks. Besides, robotic process automation (RPA) as well as artificial intelligence (AI) solutions development are receiving more and more investment and interest.
Blockchain technology is still a topic for discussion. More and more clients are placing orders on custom mobile app development using Blockchain technology. Outsourcing companies need to invest more in these techs, or to partner with a leading company in the field to provide more options to existing and new customers.
3. Choosing a qualified partner for software development outsourcing
The outsourcing market is constantly evolving. Considering the problems of the modern talent market and the rapid development of the latest technologies, it is not surprising that the enterprises are increasingly willing to benefit from the implementation of the software outsourcing trends.
Yet, every company is different, has different needs, resources, and computing infrastructure. To pick the very best service provider for your business, it’s worth specifying what you’re expecting from the outsourcing contract at the very beginning. To do so, you should analyze the possible scope of services, then verify it in terms of the company’s budget possibilities.
On the occasion that you are looking for a trusted partner in software outsourcing, Sonix may be what you are looking for.
Sonix is led by a top management team with 20 years of experience in this industry and owns an in-house R&D team. This allows the company to be able to offer the most appropriate solutions with a good concern of the latest technology in the market to our partners
Trust is always our first priority, have your digital project outsourced with Sonix to gain the commitment for your successful software project.