Trends in outsourcing are constantly changing. There are many reasons why a company may choose to outsource their IT services, from cost savings to increased flexibility or customer satisfaction. 2021 brought along significant changes in outsourcing trends, and proved that companies must stay on top of them in order to keep up. 2022 is no different, and these trends are only becoming more apparent.
One obvious shift is the increasing number of organizations that want to outsource more of their tasks. For many outsourcing organizations, the emphasis is shifting to a customer-centric approach. Many businesses are discovering that when the focus is not solely on cost cutting, they are able to drive far more attractive results.
Commonly Outsourced IT Services
In 2017, the Statista’s list reported these (in order of least to most popular) as the most commonly outsourced IT services globally:
According to the president of research and advisory services at HFS research, Saurabh Gupta: “The IT outsourcing narrative for the last decade has been closely tied to digital transformation, but digital transformation is now horizon one. It is no longer some sci-fi that will happen in three to four years, but is simply essential for survival (...) The emerging phase of IT services will need to balance people, process, technology, data, and change management to really deliver on the enterprise innovation agenda.”
- Mobile app development/Software web development
- Software app maintenance
- IT infrastructure
Outsourcing Trends Today
In 2022, IT outsourcing needs are rapidly shifting. As organizations are continuing to further their digital initiatives, there has been increased importance on the relationships they have with their IT service providers.
When asked for reasons to outsource, both clients and providers answered similarly. 35% reported cost saving as the most important, and 23% said it improved customer experience was most important.
Where pricing may have mattered most in the past, value matters more today. Because many companies have struggled to hire and retain top IT talent over the past couple of years, businesses are no longer just looking for cheap services or quick turnarounds. Instead, they are looking for value-generating strategies, incentives, and structures. Companies want strong partnerships that result in increased sales, improved customer experiences, accelerated growth, and a competitive edge. It has become increasingly clear that outsourcing these needs is one of the best options for finding and keeping the talent and skill set many companies look for in a partnership.
This year, IT spending is expected to increase by 5.1% globally. Companies are spending much more of their budget on outsourcing than on hiring in-house IT experts.
According to recent studies, large organizations have increased their IT budgets for outsourcing from 6.3% to 8.7% on average. Small organizations went from spending 6.7% of their budget on outsourcing last year, to spending 7.8% this year.
Nearshoring has changed the game when it comes to outsourcing. Nearshore outsourcing allows companies to hire top tech talent from places that are not in the US but are much closer than traditional offshore outsourcing partners. By choosing to outsource from places like Latin America, companies can ensure a better relationship with their IT developers because they work in a similar (or even the same) time zone and share language and cultural similarities.
Business models are changing because of the more recent shift to outsourcing. Today, many outsourcing partners share responsibility with their counterparts, so some business models and contracts may become outcome-based. According to a survey done by the GSA UK, nearly 90% of respondents strongly believe that both buyers and providers will be signing outsourcing contracts focused on value and outcomes in the year 2020 and beyond.
In 2022 and beyond, businesses will continue to rely on automation. IT tasks will be executed by virtual support, such as AI or bots that are professionally skilled to execute IT tasks.
The COVID-19 pandemic rapidly increased the prevalence and acceptance of cloud computing. During the pandemic, companies everywhere were forced to figure out how their teams could work efficiently, while being fully remote.
Cloud-based platforms have many apparent advantages, like allowing those authorized to access a project to view and store data without the cost of traditional data storage hardware and providing fast data access that is available from anywhere. Cloud-based platforms and applications open the door for development teams to work collaboratively and in real time.
Cloud computing services are expected to increase in value from $148.8 billion in 2019 to a whopping $947.3 billion in value by 2026. According to a 2020 study done by LogicMonitor, 3/4 of IT decision-makers believe that 95% of all workloads could be in the cloud within the next five years.
Types of Cloud Computing
There are three types of cloud computing services that are typically utilized in order to achieve goals in outsourcing corporate activities.
- Infrastructure as a Service (IaaS): Business process outsourcing companies store and process sensitive data (personal information, financial data, and other customer data) on remote servers.
- Software as a Service (SaaS): Business process outsourcing companies utilize CRM solutions (i.e., Salesforce) to manage all of their prospects' information on a single platform.
- Platform as a Service (PaaS): Business process outsourcing companies build their services with PaaS platforms. Instead of making a big commitment up front, these BPOs are able to subscribe to a PaaS and add new services whenever they are needed.
Sustainability and Long-Term Growth
How a company chooses to handle outsourcing IT services plays a role in the sustainability and long-term growth of the organization. There are many advantages to outsourcing and using cloud-based platforms, like the increased ability to focus on core business needs and stay up to date with current technology trends. Organizations in growth stages who wish to improve their business should consider outsourcing some IT services to maximize their growth window. Additionally, organizations benefit from cloud-based solutions like SaaS/PaaS/IaaS models because of their increased cybersecurity infrastructure.
Don't Fall Behind
IT outsourcing has the ability to create incredible value for an organization in growth stages by allowing for more focus on operations and core business strategies. IT outsourcing providers must understand how the market is changing to not fall behind trends and client expectations. Now more than ever, companies value trust, partnership, transparency, and a client-centric approach.
Adopting these IT outsourcing strategies and following these trends could give companies and market leaders a leg up in the coming years.