As software development outsourcing has become the new standard for all industries, we all want to know the trends in software development outsourcing and what we can expect shortly.
As we enter the third quarter of 2020, CMC Global believes this is the perfect time to forecast IT outsourcing trends quickly. If you are any business leader or an outsourcing decision-maker, CMC Global’s overview of outsourcing trends in software development will help you understand the most important ones.
The Evolution of Outsourcing Relationships
CMC Corporation Signs Strategic Partnership for Software Development Trends, CMC Corporation Signs Strategic Agreement with Samsung SDS.
Now, IT outsourcing should grow one of the essential services for companies in Asia and Africa. With myriad benefits such as cost reduction, free access to IT talent, and high production speed, that service has grown an essential part of a client’s workflow. As a result, high-tech outsourcing service providers’ role has gradually evolved from simple manual work to high-level decision-making on many vital issues, such as software architecture or the full product development cycle.
Thanks to this confidence, outsourcing companies are no longer seen as “developer placement agencies.” Many providers have become full-fledged strategic partners for entrepreneurs looking for long-term partnerships, risk-sharing, and business alignment from IT talent brokers.
For more information, click here: CMC Corporation enters into a strategic agreement with Korean IT giant Samsung SDS.
This new partnership is much more people-oriented. It focuses on the quality of collaboration and execution, on simplifying processes, but not on price. With this strategic vision, which helps a trusted partner understand the customer’s operations, you can believe in the end product’s superiority.
Signaling the Shortage and Need for Skilled Software Engineers
IT talent shortage
Global spending on IT services is expected to exceed $1 trillion in 2021, with a small increase of 5.5% due to coronavirus’s adverse economic impact (COVID-19). But such a short break is not the problem: the real question is a lack of in-house expertise, which is probably the main reason most companies outsource IT operations.
The problem is quite severe: according to a Totaljobs and Jobsite survey of more than 550 technology professionals conducted by Robert Walters, more than 70% of UK technology employers will face a talent shortage in the next 12 months. US universities are expected to be unable to fill a third of the 1.4 million IT jobs by 2020.
Until now, new technologies have developed so quickly that it has been challenging to meet the demand for talent. With such significant technological advancements, IT companies need to remain competitive in all types of services, from artificial intelligence and cybersecurity to cryptocurrencies and blockchain. New technologies and staff shortages have led to a frantic search for highly skilled workers with advanced skills.
Companies will Increase their Spending on Outsourcing.
Outsourcing costs are increasing, and several countries are moving to outsource their development.
In reality, you wouldn’t resort to IT outsourcing if you could get a local agency or engineer to do the same thing for the same or lower price. Of course, everyone wants to optimize their business on cost. Nevertheless, the condition in 2021 is gradually changing. These trends towards outsourced software are a natural consequence of the shortage of IT professionals. As highly skilled employees raise their prices, companies will be forced to adjust their software development budgets.
And according to the National Outsourcing Association’s “Outsourcing in 2020” report, the main driver for outsourcing today does not cost savings but product quality. The survey found that companies focus on customer experience, improved security, and business growth when outsourcing development.
Many IToutsourcing companies in Asia, such as CMC Global, are looking for reliable and trustworthy partnerships and long-term value. After all, the quality of a company’s products and services will determine its reputation, and IT companies need to be better aligned with their clients’ benefits.
More than One Outsourcer at a Time
Hire more than one outsourcer at a time.
As IT spending increases, even large companies tend to outsource more of their software development. However, the broader the work scope, the harder it becomes to carry all the staff, from senior management to experienced IT engineers to terrible salespeople and creative designers. These challenges can lead to a decision to have the best of both worlds, or multiple worlds, by outsourcing to different countries/companies simultaneously.
According to outsourcing trend data obtained by ISG, the number of outsourcing service providers that have moved away from the multi-service provider model has declined from 42% to 15% over the past decade. By offering niche services, they hope to improve the overall customer experience and deliver more value to their customers. According to ISG data, in 2008, 42% of the world’s largest companies in the Forbes G2000 chose to outsource their IT to individual companies, but ten years More than a decade later, that number has fallen to just 15 percent.
However, this trend is not matched by the failure of large, full-cycle outsourced software development vendors. For large vendors, having a diverse team and full communication channels within a department or section is a definite advantage over smaller competitors. It is still essential to have complete control over delivery and minimize customer involvement throughout the process.
High Demand for Blockchain Services
High demand for blockchain services is driving the trend towards outsourcing software development.
According to an IDC report released at The Cointelegraph conference, global blockchain is expected to reach $16 billion in annual spending through 2023. This vast amount means that this leading IT service will become a global leader in software development outsourcing.
For all customer processes and activities, distributed ledger technology is an innovative fundraising solution, with the added benefit of increased security and transparency. Consequently, there is a growing demand for competent and knowledgeable distributed ledger professionals in various industries, from the private sector to financial institutions. This is undoubtedly an opportunity for any outsourcing company to have an experienced team of blockchain experts.
Automation of Business processes in IT Outsourcing
Another significant application of technology emerging in various areas of our daily lives is the automation of business processes, thanks to the development of Robotic Process Automation (RPA) and its combination with Artificial Intelligence (AL).
The growing trend in workplace automation was predicted by CMC Global some time ago.
With the help of leading outsourcing providers, can effectively integrate robots (bots) and virtual assistants .into work routines to replace primitive and repetitive tasks performed by human workers. According to a GSA report, more than 80 percent of businesses expect RPA and AI to play the most crucial role in the industry by the end of 2020, I firmly believe.
Crowdsourcing trends in key industries
The latest technology trend for outsourcing in IT is cloud services. Today, having everything on a cloud platform is a priority for many businesses, as it will transfer many projects (including many trillion-dollar projects) to cloud storage to reduce costs.
Nevertheless, one point to watch out for with cloud computing is its worrying cybersecurity; with such sensitive data that IT outsourcing could expose, protecting your users’ data and project details with a reliable and secure Outsourcing provider is a top priority.
Increasing Demand for Cybersecurity
As data has long been the most valuable asset for all businesses, cybersecurity has become a top priority for all IT services, including software outsourcing.
The Growing Trend of Increasing Cybersecurity
As reported in UN Cyber Crime on rising During Pandemic, the United Nations says a “600 percent increase in malicious emails during the current crisis”. According to a UN analysis in the same report, the growing reliance on digital technology increases businesses’ vulnerability to cyber-attacks, with one cyber-attack occurring every 39 seconds worldwide.
To ensure that data is secure, do not fall victim to cyber-attacks. This is why innovative software outsourcing companies are currently implementing a multi-tiered approach to security to eliminate threats and protect business data.
According to a study on the rise of IT security outsourcing by Computer Economics, 47% of IT companies are increasing their use of external security services instead of relying solely on internal teams.
The Emergence of alternative IT Outsourcing Options
Statista’s 2019 report on the world’s leading countries for offshore business services shows that India and China are the leading outsourcing countries with around $150 billion worth of IT exports. On the other hand, places like Vietnam, Ukraine, Poland, and Romania are becoming hubs for a new generation of offshore software development.
With dynamic IT industries and thousands of IT outsourcing products, Eastern European countries threaten the traditional and popular options of Asian competitors.
Significant Digitization of the Fintech, Healthcare, and Telecommunications industries
Digital transformation is evident everywhere, especially in specific sectors such as FinTech, Healthcare, and Telecom. These are potential clients looking for outsourcing services, even amid such a pandemic: in Fintech, AI, blockchain, and Peer-to-Peer transactions are the new norm, and in an attempt to broaden the diagnostic base, AI-powered VR is set to take over public and private healthcare. To expand diagnostics, AI-based VR is set to dominate medical institutions in both the public and private sectors.
Finally, the impact of 5G networks on the telecommunications industry is undoubtedly an attractive area for outsourcing companies to compete for 5G market share. This trend will indeed open the door to unprecedented opportunities for mass connectivity with IoT networks.
When should you worry about these trends in outsourced software development?
Most CMC Global clients live up to the adage with our services and resources, “Do what you do best, and outsource the rest.” IT outsourcing can indeed bring many benefits to your business, but does that mean everyone should outsource? Here are a few scenarios that require outsourcing.
Lack of Technical Expertise or Speed
Outsourcing is the resolution for you if you require technical knowledge or a lack of on-site IT talent. Speed is also a consideration, as getting an agile engineering team is quite a challenge in some countries or areas.
Outsourcing companies, especially from technology hubs such as China, India, and Vietnam, offer specialists in a wide range of technologies. IT talent with different skills, but you can also get C-specialists as higher-level professionals from the CTO to gain a new perspective and establish the right Agile workflow and principles.
Outsourcing is a vast way to prevent wasting time on micromanagement, which happens when your employees have to keep track of everything, even unimportant details. This can cause you to miss or ignore relevant information.
By choosing to outsource, you can focus on optimizing your business and core competencies with marketing, fundraising, or sales, leaving all technical decisions to the outsourcing experts.
This is the central purpose why companies choose to outsource. By having an offshore development team doing all the complex IT work for you instead of paying an entire in-house team, you can significantly cut costs from bonuses, perks, and other hidden fees to keep your employees happy and dedicated.
The ability to outsource IT services keeps you one step ahead through constant innovation. So you’re always exploring new competitive opportunities for your business thanks to a much broader knowledge base.
A reliable outsourcing provider is always on top of the latest IT solutions and market trends, and it’s a shame you don’t take advantage of them.