The IT outsourcing market is changing rapidly, and it’s set to evolve even more in the coming years. Tomorrow’s IT outsourcing is going to look different due to new trends and changes in the industry. The outsourcing market is growing rapidly and is driven by companies looking to cut costs and increase business efficiency. According to Deloitte, global spending on outsourcing is expected to reach $731 billion in 2023.
When you look at it, almost 70% of all outsourcing contracts have something to do with IT outsourcing services and software development. However, the current trend shows movement in outsourcing methods caused by the global situation. That includes more flexible IT services and increased collaboration between vendors and clients. Here are nine things you should expect in 2023.
Top Industries That Outsource the Most
Interest in It outsourcing is nothing new, and it continues to grow due to digitalization, enterprise applications, and home office setups. IT outsourcing is adopted by large and mid-sized companies, but small businesses are trying to keep up with their abilities. The companies that opt for outsourcing IT range across industries such as telecoms, finance, e-commerce, healthcare, and manufacturing.
These services vary but mainly focus on software development, infrastructure management, and IT support. However, the main reason for outsourcing is the evident shortage of IT experts caused by demographic issues and the high demand for skilled workers.
That said, the segment of IT outsourcing is growing and is expected to have significant growth in the following years. That means a higher demand for services companies can outsource and increase nearshoring and offshoring services.
Moreover, the small percentage of companies that have never outsourced IT tasks, including software developers, are thinking of their competitors’ advantage over them. Hence, many businesses outsource IT because it allows them to focus on their core business while outsourcing to experts that ensure everything runs smoothly.
However, global shifts are influencing the market. So, let’s look at how IT outsourcing will change in the upcoming period.
Multisourcing – Change in Approach to Outsourcing
As we move into an era of more complex business needs, companies find it easier to outsource tasks to various specialists. Multisourcing is an emerging trend in the outsourcing industry, a model that allows companies to outsource work to multiple providers, who can then work together to complete a project. That includes freelancers and outsourcing companies alike. The result? More opportunities for companies, who can now focus on what they do best while still getting the benefits of working with experts in other fields.
The shortage of experts and cutting costs will drive a need for flexibility in staffing models. As a result, the days of traditional outsourcing are numbered. Instead, the new era starting with 2023, will be one where companies partner with their suppliers to create innovative products and services while also driving down costs and reducing risk.
Engaging the World
In previous years, we have seen that companies can engage a global workforce and customers from anywhere. With the advent of global collaboration tools, working across time zones is easier. That means finding like-minded people and companies that share the same value as the business.
That includes understanding the customer’s needs and intent. In the recent period, even the search engines know that it’s no longer enough to have the keywords but provide value for the user. The same rule applies to IT services.
Long gone are the days when companies had to hire local experts. With the growth of technology, they can hire anyone in the world. That means placing the user at the center and providing a product or service that aligns with their needs and intent.
Hence, there is a trend in finding the right IT service provider who understands requirements from a commercial perspective, and it no longer has to be on the same continent as the company.
Focus on the Solution
The focus is now on the solution, not the technology. Therefore, solution providers are more important than technology providers. For example, a few years ago, when you wanted to build a website for your business, you would ask your web developer to make an excellent-looking site that was easy to navigate and worked well across all devices.
Today, if you want to build a website, one of your first questions should be: “What kind of company do they work with?” Naturally, you want someone with experience working with small businesses like yours because they understand how to get things done quickly while keeping costs down.
The solutions that IT outsourcing companies offer clients will be more integrated and more customized than ever before. As clients become more comfortable with IT outsourcing services, their expectations are going up too—they expect solutions explicitly tailored toward their needs rather than just general solutions that may or may not work for them (and could result in unnecessary spending).
Data at the Center of Outsourcing
The one thing we are sure of is that data will be at the center of all future outsourcing deals. Data is becoming more valuable than ever, and companies are trying to figure out how to use it to their advantage.
Using your data, you can create new products and services to help you sell more. This can lead to more significant revenue growth, faster time-to-market, and better customer service. The major problem is keeping the data safe, which is why companies outsource data to external providers who offer data management functionalities.
Risk and Security
However, with the wealth of data comes the significance of the dangers of data leaks and cyber-attacks. It is why data protection will become one of the most critical trends in 2023. According to Statista, the security market will reach 538 billion dollars by 2030.
One of the biggest concerns for companies outsourcing their IT is security. If you’re looking to outsource your IT services, your provider must invest in the latest security protocols and best practices. It’s also vital that they are up-to-date with all local and global regulations.
The two biggest trends we’re seeing are the move towards cloud-based solutions and increased data protection. Cloud computing is becoming more popular because it provides better access to data and resources. As technology advances, we expect to see more businesses moving towards cloud-based systems and investing in data protection.
A new way of working that combines cloud-based solutions with on-premises capabilities. Hybrid workplaces are the future of technology and are already here today. The hybrid workplace is a mix of on-premises and cloud-based solutions, which companies can use to create a seamless experience for employees across multiple devices and locations, wherever they may be, at any given time.
The hybrid workplace offers businesses a new way of working that combines the best of both worlds, on-premises, and cloud-based solutions. This model has many benefits: improved customer satisfaction; increased productivity; reduced costs; and more flexible IT management.
With a shortage of IT professionals, there will be more demand for those who can work across languages and cultures and are comfortable with remote work environments.
Era of Hyperspecialization
There’s a lot to be said about the power of specialization. In the business world, we’ve seen a growing trend in the number of professionals who can hone their skills to a razor-sharp point and become experts at what they do. This has led to an increase in efficiency, lower costs, and happier customers.
Many companies have found that productivity gains come from dividing work into smaller tasks. But, unfortunately, that means that a person becomes specialized in one task. That is why specialization is becoming more common because they focus on specific studies done to perfection and at lower costs than others.
For example, many companies hire a project manager and spend countless hours preparing the slide deck. So not only do they have to know the software and design skills, but they also need to spend time on peripheral tasks and activities.
Nearshoring Beats Onshore Outsourcing
While onshore outsourcing is still the most popular choice for companies, nearshoring quickly becomes a viable alternative. Many companies consider nearshoring due to security risks, cost-prohibitive labor costs, or talent shortages.
The latter is the most common cause of why western European companies choose to hire outsourcing companies from eastern Europe. The shift in the global situation has moved the attention to east European countries and their software developers.
New Breed of Business Consultants
A new breed of business consultants is emerging: the technical business consultant. This is someone who understands how businesses operate and how technology can help them grow but also profoundly understands how technology works. They can translate technical jargon into language that non-technical people can understand, and they know what questions to ask to get to the root cause of a problem or opportunity.
With this type of expertise on hand, businesses can cut out the intermediaries and work directly with external experts when they need advice on IT outsourcing. The days when corporations would bring in an outside company for all IT-related things are over—now it’s up to business consultants to tell companies what they need from an outsourced tech team!
Conclusion – Future Of Technology 2023
As the impact of technology on business continues to grow, so will its role in outsourcing. As we enter 2023, we’re a part of an exciting time for IT outsourcing. The future will see more and more companies exploring new ways of doing business together, leveraging each other’s strengths to increase their value proposition and impact on the market.
The future of IT outsourcing is bright, and it’s likely to have some significant changes coming. Whether it’s a new approach to outsourcing or choosing to nearshore their processes, there are plenty of ways that companies can take advantage of these trends in 2023.