Outsourcing IT Services: The global business landscape is constantly evolving. Businesses are constantly looking for ways to streamline processes, optimize resources, drive innovation, expand their reach, and of course keep costs under control, to thrive. One such growing trend, specially in software development, is collaborating with the talent pool in developing countries.
Outsourcing IT services allows businesses to access an affordable talent pool while fostering growth and development simultaneously.
Following are some of the compelling reasons why collaborating with emerging economies can propel your business forward.
The Growing Trend in Outsourcing IT Services
The rise in popularity of outsourcing IT services has been astounding. As we move into a new tech era, it is now crucial for organizations to understand the trends in order to succeed.
IT outsourcing reached a significant turning point in 2023. Up 22% from 2019, the global market for IT outsourcing reached $971.2 billion. This expansion was driven by trends toward remote work, the deployment of workplace software, and the digital revolution. IT and telecoms accounted for 15.77% of the market, according to Revenue Industry Share statistics from 2023.
The global corporate landscape is being shaped by changing trends in IT outsourcing in 2024. Businesses nowadays concentrate on software development and tech outsourcing trends in the digital era. It’s similar to having an advantage when playing a competitive game.
IT outsourcing will cost roughly $512.60 billion in 2024, according to key estimates, and will reach $777.80 billion by 2028. The percentage of offshore outsourcing is expected to be 43.46% and 45.24% of these statistics, respectively.
(Source: Bureau of Labor Statistics)
Why Companies Outsource to Emerging Economies?
According to the Deloitte Global Outsourcing Survey 2022, the largest internal barrier in implementing company strategy, according to one in two executives, is finding highly skilled professionals. The problem of inadequate data analysis methods and tools directly underlies this.
It is therefore not surprising that access to new opportunities (both personnel and technical) is one of the primary drivers of increasing outsourcing investment; nearly half of the decision-makers cited this as the reason for the rising use of Operate Services (49%), Managed Services (56%) and Traditional Outsourcing (49%).
Managed service models are seen as a crucial first step in the modernization of technology and digital transformation: Apart from the availability of novel prospects, the primary drivers of rising usage are the quickening pace of digital change (62%) and the growing, more intricate nature of cybersecurity threats (54%).
Additionally, cost savings is crucial, particularly in conventional outsourcing models: Cost reductions are the primary driver of increased use, according to 57% of decision-makers.
The Evolution of Outsourcing IT Services to Emerging Economies
In the IT industry, outsourcing is becoming more and more popular. Partnership-based models have replaced the days of inexpensively run helpdesks as a means of assisting companies in their digital transformation. One of the biggest IT issues that outsourcing is helping firms with is the lack of skilled workers.
How Does Outsourcing IT Services to Emerging Economies Help in Cost-effective App Development?
The affordability of outsourcing IT services is one of its biggest advantages. Businesses that outsource their IT operations save money by not having to invest in infrastructure, software, equipment, or personnel recruitment, hiring, and training. Instead, since the outsourcing provider already has the required capabilities, businesses can shift these costs to them.
Additionally, outsourcing IT services reduces total expenses and boosts revenues by streamlining processes and doing away with overhead.
Here are a few additional significant advantages of cost cutting to think about:
- Lower Staffing Costs: By doing away with the requirement for a full-time IT team, pay, benefits, infrastructure, and training may all be cut. Pay only for the particular services you use instead.
- Lower Labor Costs: By collaborating with suppliers in areas with cheaper labor costs, you can drastically cut your IT spending. This is especially helpful for smaller companies or those with specialized IT requirements.
- Optimized Resource Allocation: Free up internal resources that were previously devoted to IT-related duties so they may concentrate on revenue-generating and core company operations.
Most Commonly Outsourced Services
Clutch reports that 27% of small firms outsource their IT services, with IT services and accounting leading the requirements at 37% and digital marketing coming in second at 24%.
Cost to Outsource App Development
Top Emerging Economies for Outsourcing IT Services
- India provides 80% of outsourcing services (Orient Software).
- According to Orient Software, over 59% of companies worldwide currently outsource some kind of procedure to India.
- Outsourcing accounts for 9% of the Philippines’ GDP (Expploding Topics).
- According to Enterprise Apps Today, the states with the most percentages of outsourcing are California, Texas, and New York.
Why is India a Global Leader in Providing Outsourcing Services?
For many years, India has been the top choice for outsourcing and offshore, particularly for English-language operations. With a history of providing highly skilled services like virtualization, data processing, and data input, it has shown to be the most developed market for service outsourcing.
Over 59% of companies worldwide currently outsource some kind of service to India. The two most popular types of outsourcing are BPO (business process outsourcing) and IT. Infrastructure, software developers, and technical support teams are in great demand. Their services are significantly less expensive, just as beneficial, and effective as hiring a local organization.
India has a large talent pool that is well-suited to meet the demands of several industries, including IT/ITeS. Since the nation is home to over 100 million English-speaking people—the second-largest population after the United States—language barriers do not provide a problem. More than 150,000 engineering graduates enter the IT sector each year, guaranteeing an endless supply of services.
Conclusion
Collaboration with emerging economies is full of opportunities that can drive cost-effective software development for a business. From cheap talent and innovative technologies to market expansion and supply chain efficiency, the advantages are many. Besides, such collaborations help in the development of a more socio-economic impact and bring about corporate social responsibility, which helps to earn a better reputation and long-term existence for the company.
In the never-ending development of global markets, those businesses that manage their cooperation with emerging economies strategically will be the ones to overcome challenges, realize opportunities, and be able to make sustainable growth. Embracing such cooperation is not only a measure of saving costs but a forward-thinking approach, congenial to the dynamics of today’s global economy.
