When the idea of outsourcing first appeared, most of the companies in search of offshore software development partners were small and medium enterprises that didn’t have enough capital or know-how to develop a major project – as large companies were able to handle all of their IT projects in house. In later years, as technology became more and more complex. Companies of all sizes started to love outsourcing. This allowed them to focus on their growth and on keeping up with their competitors.
Outsourcing is now more than a low-cost overseas solution, offering multiple benefits to businesses around the world. This is the reason why today we are going to review the top outsourcing trends of 2022 and how they might affect your business:
1. IT spending is expected to increase
The global IT spending on devices, enterprise software, and communications services is expected to increase by 5.1% in 2022. This is the utmost evidence that outsourcing is becoming more attractive to all organizations worldwide. They are spending a lot more of their budget on outsourcing than hiring in-house IT experts.
Recent studies indicate that large organizations have increased their IT budgets spent on outsourcing from 6.3% to 8.7%. Small organizations are now spending 7.8% of their IT budget on outsourcing, compared to 6.7% last year.
2. Cloud services
74% of IT decision-makers predicted that 95% of all workloads would be in the cloud within the next five years, according to a 2020 study developed by LogicMonitor. It’s not a surprise, as the advantages of using cloud-based applications in a software development company are clear as day. Every person authorized to access a project can view files and data without investing in traditional hardware for data storage. This means you can access data much faster and from everywhere. Moreover, cloud-based applications are a lifesaver for offshore software development teams. They allow real-time and collaborative work.
The pandemic accelerated the adoption of cloud computing, as companies worldwide were put in a position to enable their teams to work fully remote. The value of cloud computing services is expected to reach $947.3 billion by 2026. This is a considerable increase, from $148.8 billion in 2019, according to MarketsandMarkets.
3. Better cybersecurity demands
Although cyberattacks have been around for a while, many companies with sensitive data have implemented some cybersecurity. The truth is that since the start of the global pandemic, these attacks have increased by up to 600%, according to the 2021 Cyber Security Trends Report. This spike is why many companies felt the need for more robust cybersecurity measures to keep their business data safe. Many of them choose to outsource development services to experts. They can effectively protect their applications from fraud and protect their customers’ information from the log-in phase to storing data back-ups.
4. Outsourcing rise among start-ups
80% of small businesses in the US were planning to outsource at least one business process in 2021 to a vendor, according to a Clutch survey. And if you think about it, why shouldn’t they? Outsourcing software development is the most popular solution SMEs adopt to ease the financial burden they often face in the early growth stage. It allows them to decrease workload and focus on their core products and critical tasks.
5. Favoring nearshore outsourcing
When considering outsourcing, most companies prefer a nearshore software development partner. It is due to the relative comfort in managing supply chains over a shorter distance and more minor time zone differences. Another advantage of nearshore outsourcing is that there are no significant cultural differences between your team and your outsourcing partner. This makes it easier for them to align with your business values and deliver your desired results.
6. IT outsourcing to Eastern Europe
When it comes to IT outsourcing destinations, Eastern Europe is growing in popularity every year. Just imagine, in 2022 European tech is projected to cross the $100B milestones in capital invested in a single year, close to 3 times the level in 2020!
More and more companies outsource to Eastern Europe due to cheaper fares and highly-skilled software engineers. This helps them to reduce costs and remain competitive while not having to worry about the recruitment process.
7. Emphasising cost reduction
70% of companies said cost reduction was their main outsourcing objective, according to Deloitte’s Global Survey in 2020. This trend is here to stay long after the pandemic is gone. The benefits of outsourcing software development are not just lowering the costs and getting access to a large talent pool. A higher ROI (Return on Investment) for every web or mobile development project is significant. IT projects can easily benefit from a competitive advantage, making it easier to stand out from the crowd. This is thanks to an offshore development team‘s expertise, technical know-how, and experience. So, when choosing a software development company, you shouldn’t only focus on the price.
We hope that these major IT outsourcing trends for 2022 have helped you gain better insight into the software development industry and that you’ll now be able to adapt your business plan. If you ever need the support of a professional outsourcing partner, our team at Redbee Software will be happy to help.