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, as it 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 – and 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 around the world – and they are spending a lot more of their budgets on outsourcing rather than hiring in-house IT experts.
Recent studies indicate that large organizations have increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7%, while 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 that is authorized to access a project can view files and data without having to invest in traditional hardware for data storage – this means you can access data much faster and from everywhere in the world. Moreover, cloud-based applications are a lifesaver for offshore software development teams, as they allow real-time and collaborative work.
The pandemic really accelerated the adoption of cloud computing, as companies around the world were put in a position to enable their teams to work fully remote – in fact, the value of cloud computing services is expected to reach $947.3 billion by 2026, from $148.8 billion in 2019, according to MarketsandMarkets.
3. Better cybersecurity demands
Although cyberattacks have been around for awhile and many companies working with sensitive data have implemented some sort of 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 the reason why many companies felt the need for stronger cybersecurity measures in order to keep their business data safe, and many of them choose to outsource development services to experts who can effectively protect their applications from fraud, as well as 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, allowing them to decrease workload and focus on their core products and critical tasks.
5. Favoring nearshore outsourcing
When taking into consideration to outsource, most companies prefer a nearshore software development partner, due to the relative comfort in managing supply chains over a shorter distance and smaller time zone differences. Another advantage of nearshore outsourcing is the fact that there are no major cultural differences between your team and your outsourcing partner, making it easier for them to align to your business values and deliver the results you are looking for.
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 choose to outsource to Eastern Europe due to cheaper fares and highly-skilled software engineers – thus helping 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 will be gone, as the benefits of outsourcing software development are not just lowering the costs and getting access to a large talent pool, but also a higher ROI (Return on Investment) for every web or mobile development project. Thanks to the expertise, the technical know-how and the experience of an offshore development team, IT projects can easily benefit from a competitive advantage, making it easier to stand out from the crowd – this is why 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 – and if you ever need the support of a professional outsourcing partner, our team at Redbee Software will be happy to help.