August 18, 2021

5 IT Outsourcing Trends For 2021+ That You Do Not Want To Miss

- 6 min read

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Introduction

Organizations outsource IT services for a variety of reasons, ranging from operational flexibility to the need for new, specialized skills to cost-saving measures. Market trends, on the other hand, are changing rapidly. Some trends will become less significant than they have been before, especially when COVID-19 occurred in 2020 and created the “new normal” situation.

In order to stay updated, companies must be prepared for the new trends of IT outsourcing. This article will help you be aware of IT outsourcing trends to embrace them appropriately.

IT outsourcing overview

So, what do you know about IT outsourcing nowadays? Before jumping into the trends, let take a look at the list of the most outsourced IT functions in 2017, according to Statista.

The functions are listed from the most to the least popular:

Software web or mobile app development
Software app maintenance
Datacenters
IT infrastructure
Helpdesks
Networks
Integrations
HR

Here are some prominent insights of IT outsourcing in 2021:

Technavio predicts that the market value of IT outsourcing will be $486.16 billion by 2024, growing at 5% during 2020 – 2024.
Fintech, healthcare, and telecom are among the industries where most organizations are accelerating their digital transformation. These industries tend to follow IT outsourcing trends and are the most likely clients to seek IT outsourcing services.
The use of cloud computing is on the rise. In the future, companies will increasingly outsource cloud-related tasks such as migration, maintenance, security, compliance, and day-to-day troubleshooting. According to Gartner, cloud system infrastructure services will grow from $44 billion in 2019 to $81 billion in 2022.
The global pandemic has impacted significantly IT outsourcing trends in 2021. We are seeing an increased demand for IT outsourcing from many companies of different sizes. Many of those who have never outsourced before also intend to do so for the first time in 2021.

Top IT outsourcing trends in 2021 and beyond

Outsourcing trends for 2021 will be more agile, diverse, and automated because of global changes brought about by 2020. It appears that the IT outsourcing industry will be able to assist companies in coping with the new challenges that will arise as a result of the current economic crisis in 2021.

In-demand tech skills

From a Burning Glass Technologies report on 2021's tech job demands, quantum computing, connected technologies, fintech, as well as AI and machine-learning expertise are predicted to be in high demand. Employers will also seek professionals with expertise in automation, cybersecurity and cloud computing.

With 197,810 open positions today, the demand for AI and Machine Learning skills is expected to grow at a compound annual growth rate of 71% through 2025. 3.5 million cybersecurity jobs will be available worldwide in 2021, according to a report by Cybersecurity Ventures. It's important to note that during the pandemic, cloud has experienced rapid growth and is now stronger than ever before. Therefore, cloud skills are in high demand, as every digital company strives for agility to meet expanding client demands and assure business continuity.

Eastern Europe is becoming an IT outsourcing hotspot

Eastern European countries will become more appealing as IT outsourcing destinations in the future, according to the report. The leading outsourcing countries, India and China, will continue to dominate global outsourcing revenue, but Ukraine, Poland, Belarus and Romania will be a formidable competitor.

According to the latest report on software development in Central and Eastern Europe, outsourcing in the region is growing at a rate four to five times faster than the global average (20 to 25 percent y-o-y vs. 5 percent globally), with the United States and the European Union as the primary customers. In 2021, this trend will continue. When it comes to hiring the best tech talent in CEE, businesses will choose offshoring over nearshoring.

The year 2020 has been a record-breaking year for tech investments in Europe despite all odds. An Atomico’s report found that $41 billion was invested in European tech. By comparison with the results of 2019, Ukraine's capital investments in technology increased by $4M.

Strategic partnerships

Finding a reliable provider and establishing productive working relationships with remote teams is not an easy task. Companies will increasingly focus on single vendor outsourcing in the future. As a result, they will want to avoid all the headaches and risks associated with managing multiple vendors. Instead of outsourcing to multiple vendors, companies will focus on building relationships with one vendor.

As supplier-customer relationships keep improving, the distinction between outsourcing core tasks and non-core tasks will become less significant. Eventually, offshore teams will be integrated into client organizations. As a result, they will take care of all tasks necessary for the client's satisfaction.

Vendors need to be more flexible

As IT outsourcing relationships evolve, so do client expectations. Many of them will expect their service providers to be flexible in a variety of ways. Their providers must be able to scale up and down their services in accordance with their needs. Suppliers must be prepared to restructure teams quickly and be agile in order to deliver results faster.

In addition, companies will look for IT outsourcing partners who can accept their business ethics and quickly adapt to them. The in-house team will appreciate it if offshore developers can easily integrate into the company.

Another thing that modern clients want is to stay current with technological advancements. As a result, they expect that their remote IT specialists will be eager to put the latest technologies to use. In addition, they will prioritize vendors who are willing to invest in upskilling their workforce if necessary.

Blog - Groove Technology - 5 It Outsourcing Trends For 2021+ That You Do Not Want To Miss - 3

The in-house team will appreciate it if offshore developers can easily integrate into the company

Regulatory agility

There will be a wide variety of new restrictions in 2021. Therefore, service providers and tech businesses must be adaptable to changing norms. They should carefully design contract conditions based on new procedures and back-end processes, taking into consideration all costs associated with their implementation.

The United Kingdom has been out of the EU single market and customs union since January 1, 2021. On a legal level, partnership relationships with UK clients will change. In addition, the EU intends to pass two new laws: the Digital Services Act and the Digital Markets Act. Their primary goal is to reduce the spread of harmful content while also increasing competition. Other countries have implemented similar new regulations.

In the United States, regulators sued Facebook for illegally suppressing competition, and Google was hit with an antitrust lawsuit in October. The Chinese government has begun to crack down on domestic tech giants such as Alibaba. Among those debating new regulations are Australia, India, and Brazil. In 2021, the trend will continue.

Conclusion

To sum up, it is essential to find a reliable offshore technology partner to be ready and well-prepared for the new wave of IT outsourcing trends in the future. At Groove Technology, we offer team augmentation and full team outsourcing services with flexible process based on your business goals.

Matt Long CEO AT GROOVE TECHNOLOGY

Matt Long is the founder and CEO of Groove Technology. Groove Technology recruit at the top of their market, providing cutting-edge software development services to partners located across the world through a unique, integrated resource model. You can get in touch with him here, or find out more about Groove Technology Services.