7 Major IT Outsourcing Trends for 20228 min read
Outsourcing was heavily attacked in its early days, as with many revolutionary techniques. Those who oppose it claim that outsourcing is responsible for various adverse effects, from encouraging companies to outsource tasks that they can no longer perform internally to generating a significant decline in the domestic labor market. When it comes down to it, outsourcing has become a full-fledged business strategy because of its two primary advantages: cost-effectiveness and access to global talent. IT outsourcing is no exception, though, and it is constantly evolving and proposing new techniques as it does so. This article will walk you through 7 main IT outsourcing trends expected to emerge in 2022, along with their implications for your organization.
This article will walk you through 7 main trends expected to emerge in 2022, along with their implications for your organization.
What is IT outsourcing?
IT outsourcing is a term that refers to a procedure in which a business or company employs a third-party firm to undertake IT services on their behalf. This is a common practice, as many businesses lack the resources or skills necessary to handle specific IT requirements in-house. This might range from straightforward duties such as planning or designing mockups to more involved tasks like programming and web development.
There are various reasons why businesses outsource their information technology services, but the primary ones are as follows:
- Boost efficiency and effectiveness by bringing in specialized talents, expertise, or technology that are not available on an internal basis;
- Reduce costs through scalability and flexibility — Hiring an outside company enables you to scale up (or down) in response to changing demand.
Of course, there are more reasons why businesses outsource, but the ones listed above are the primary drivers of this practice.
The impact of COVID on the IT outsourcing market in 2021 and beyond.
The global pandemic caught humanity off guard, creating worldwide chaos and halting nearly all activity—from work and school to entertainment and communication. Some industries (such as tourism or air transportation) were brought to a halt, while others survived by drastically reducing the number of employees and their pay – but no domain was spared. The apocalyptic fear of infection, declining consumer demand, supply chain disruption, and many waves of lockdowns all harmed the IT industry, as most organizations cut back on spending and put new product development on hold.
One of the most important lessons COVID has taught us is that we should enhance digitization in all aspects of society to be prepared for remote engagement in future contingencies. Companies recognize the critical role of IT specialists in fueling this quick digitization drive, resulting in high demand for their services.
What will be the IT outsourcing trends in 2022?
Now it's time to address the big question: What will be the IT outsourcing trends in 2022? Let's get into some of our predictions without further ado.
Global IT spending is expected to grow.
The amount of money spent on information technology will rise worldwide. Many experts predict that global information technology spending will increase by 4% in 2021 and even more in 2022. The increase in IT spending will be accompanied by an increase in the use of outsourcing services.
According to IDC, IT spending is expected to increase by 4.2 percent by 2021, resulting in total revenues of $5 trillion.
The COVID-19 pandemic accelerated this divergence. All growth in traditional technology spending (hardware, software, services, and telecommunications) over the next five years will be driven by just four platforms: cloud, mobile, social, and big data/analytics. Meanwhile, cost savings from cloud and automation will result in increased spending on emerging technologies such as AI, cloud-based, IoT, and blockchain. Additionally, next-generation security in conjunction with new technologies will continue to drive significant growth.
The scope of remote work increases
Since the outbreak of the pandemic, there has been a significant increase in the use of remote work. Even though there is a lot of good news about the end of the pandemic, the practice of remote working does not appear to be going away anytime soon. According to Gartner, by the end of 2021, 51% of global talent will be working remotely.
The rise of remote work will have a significant impact on the growth of outsourcing. Companies that were previously opposed to hiring a remote team abroad are now more likely to be interested in and less hesitant to outsource certain functions to a third party at a lower cost.
With remote working becoming the new normal, businesses are looking to outsource a broader range of projects and use remote working collaborations to hire talent while significantly reducing costs. Because of a behavioral and mental shift in the way we work, companies that were previously opposed to hiring teams abroad now have their own team members who work remotely. This means they'll be more willing to outsource functions to third-party vendors at a lower cost. This means that there are numerous new opportunities for growth and expansion for offshore businesses.
Cloud services will grow
This category has grown at a rapid pace since the introduction of cloud computing in 2006. Companies worldwide invested approximately $ 175.8 billion in cloud computing infrastructure and services in 2018. This trend is expected to continue in the coming years. According to Statista, the global cloud computing market will be worth $482 billion by 2022.
Cloud computing services will continue to grow in popularity. Cloud computing services are a great solution for many businesses because of their low monthly costs and low overhead. They will not have to worry about making an upfront investment in expensive hardware and will be able to use their resources to make other investments. Cloud computing services provide other benefits, such as enabling teams to work from anywhere.
As the world moves toward cloud computing, more and more businesses will look for providers who provide on-demand cloud computing services. In line with this trend, we anticipate increased demand from businesses across industries for cloud engineers and developers who are familiar with cloud infrastructure and management.
The popularity of Artificial Intelligence (AI) will increase.
When it comes to the IT outsourcing trends that will dominate in 2022, AI is a hot topic. With so much emphasis on customer service and experience, AI can significantly simplify business processes by handling massive amounts of data and mining it to provide better user experiences. They can also reduce the average handling time for customer complaints and queries, allowing customer service executives to focus on more complex and difficult problems, as well as personalized services.
AI also enables businesses to gain greater control over their data and processes, intelligently integrating all areas of business. As demand for AI grows, companies are looking to outsource AI-driven projects or want outsourcing service providers to incorporate strands of AI into their existing processes.
Because not all businesses can develop and implement machine learning and AI into their software on their own, they will outsource these functions to providers with subject-matter expertise to implement these functions. Outsourcing service providers are increasingly incorporating AI components into their applications and processes to make them smarter.
Demand for blockchain services will increase.
The blockchain is a decentralized ledger that records all transactions. Although this technology has existed for years, it was Bitcoin that brought the concept to the mainstream when it became the first cryptocurrency to use the blockchain as its underlying platform. Since then, numerous other businesses have begun utilizing similar platforms to market their services and products. Experts predict that this trend will continue to accelerate over the next few years, as more businesses learn how to integrate blockchain technology into their operations.
In terms of outsourcing providers, we anticipate an increase in demand for services such as decentralized application development (dApps), software engineering for crypto projects, and exchanges.
Cybersecurity specialists are in increasing demand.
The popularity of cloud computing, mobile devices, and the Internet of Things has created a slew of new opportunities. However, it has exposed businesses to previously unimaginable security threats.
In today's digital world, hacking, cyberattacks, and data breaches are all too common. Indeed, the number of connected IoT devices has increased by 9% to 12.3 billion globally. This massive number complicates the task of protecting these devices from hackers, resulting in an ever-growing demand for cybersecurity professionals capable of keeping up with this fast-paced industry.
In the coming year, we expect IT outsourcing providers to offer a broader range of cybersecurity-related services. A growing number of businesses will be looking for software engineers, distributed application developers, and information technology security experts who can assist them in remaining one step ahead in this area.
Eastern European vendors' subsequent increase
Eastern Europe is already a popular destination for IT outsourcing due to its lower costs, high-quality technical education, and abundance of talent. However, the region is gaining increasing attention from multinational corporations. Eastern Europe is home to vibrant IT communities. The region's talent is employed by world-leading companies such as Google, Microsoft, and Amazon.
Additionally, with the exponential growth of the startup ecosystem, Eastern Europe not only solidifies its position as a top IT outsourcing destination but is also poised to claim a larger market share in the coming years.
Why should you choose Groove Technology to be your IT outsourcing provider?
As one of the IT Outsourcing Providers recognized by Designrush, serving customers globally for projects of all sizes and scopes, Groove Technology is fully committed to delivering best-in-class outsourcing services for all types of customer needs. Our goal is to provide the best and highest value to our customers through our flexible process of outsourcing services.
When partnering with Groove Technology, we will provide the right talent for your project to expand your team capacity in the long run. Your in-house team will work with experienced developers in various fields such as Java Developers, IoT, eCommerce, etc. Moreover, we can ensure a seamless transition of your new offshore team members to your main team for successful solutions.
As you can see, the year 2022 will be an exciting one for businesses and IT outsourcing providers alike. Several software development trends will impact the IT industry as well as our lives. More companies will seek out AI, cloud computing, blockchain development, or cybersecurity outsourcing providers in the future. So, it’s reasonable to plan on implementing at least one of these in your business. The best way to accomplish this is to form an offshore development team.
Contact us now to discover how it works!