Software Development Outsourcing to Grow by 70% in 2023

Although Software Development Outsourcing (SDO) had been gaining momentum before the pandemic, it began snowballing when the new norm of WFH was established. Many Tech companies have utilized SDOs to take advantage of higher productivity, cost savings, enhanced team collaboration, improved employee health of their own staff due to reduced workload, and the increase in the talent pool. The popularity of outsourcing SW devs is inevitable. 

Regardless of  industry, the pandemic managed to accelerate the SDO revolution within the IT sector. This pandemic-influenced reality has brought about significant changes by enticingIT professionals to quit their jobs in 2021 to work for SDO companies that offer more benefits as compared to their onshore counterparts. 

According to Commit, “As remote work becomes the norm, a lot of companies have taken this opportunity to hire anywhere in the world. They can see that it’s fueling unprecedented productivity and growth, as they have become accustomed to virtual meetings and the cloud.”

Statista illustrates through numbers the direction where SDO is headed. If the global outsourcing market holds the value of 92.5 billion US dollars, then software development companies contribute to the value the most by generating over 50% of the outsourced value (66.5 billion US dollars). 

Currently, the most outsourced SW dev service is UX design at 34% and product SW dev also at 31%.  Supplier Quality Assurance (SQA) services are being outsourced 28% of the time. Of course, this could change in the future. 

A study by Security Boulevard reflected the mindset of IT professionals and tech executives regarding SDO. 34% of the companies included in the study showed an interest in altering their strategies in order to incorporate outsourced dev services, whereas only 9% had plans to employ a permanent in-house team for software development services.  This shows a significant shift in the SDO industry.

As the growing trend of offering outsourced IT services rises, it becomes important to shed light on the various SDO domains in demand:

1. AI and ML-Based Software Development

Because of the increasing popularity of AI and ML software, there’s a great chance that they will become the most widely outsourced type of software development. AI and ML provide virtual assistants and optimization in software which can allow companies to enhance their relationships with their customers. ML also helps companies influence customer behavior and offer predictions regarding marketing trends, making ML and AI key to their success.  

2. Platform-Independent Application Development

Many companies are looking for custom software development services that enable them to establish cross-platform application development. Outsourcing these platform-independent app enables companies to quickly scale hybrid applications that utilize custom APIs, well-known cloud services, software stacks, and proprietary IP.

3. Cybersecurity

Companies have realized the dangers of having data and software online without proper security and have moved to their platform to cloud services. Because of this, it is becoming more and more popular to build a hybrid team of in-house and outsourced, global cyber security experts. 

All in all, the trends of hybrid workplaces, the digital transformation and automation initiatives, as well as the blended cost model SDO offers, are coming together in the perfect storm. By utilizing SDO, companies can gain a competitive advantage in their marketplace.

Next up in our blog: How does SDO from a company in the Philippines help you gain an advantage with your hybrid dev team?

Infinit-O partners with the world’s fastest-growing Technology, Financial, and  Healthcare services companies that want to scale more effectively and advance their brand, providing a strategic advantage. Demonstrated by our world-class Net Promoter Score of 67+, we deliver the highest quality outsourcing services using our unique data-driven approach – combining powerful technology and high-performance teams within our highly-engaged and agile culture. Our expertise includes Customer Experience, Back Office, Sales, Data Science, and Engineering.

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