Outsourcing trends in software development in 2021

Posted by olivia cuthbert on February 27th, 2021

Since 2000, the outsourcing industry's market size has grown from USD 45.6 billion to USD 92.5 billion. The steady growth shows that the market embraces outsourcing as a development strategy and that outsourcing is here to stay.

Many executives prefer to work with contractors to build their software. They say it is easier to hire engineers who are committed to their long-term success. Hiring internally, however, takes a lot of time and effort. Sometimes it doesn't work. The challenge arises when you want to expand your team or look for a specific skill.

That's where outsourcing comes in. A right outsourcing partner can bring many benefits, both financially and professionally. Companies start outsourcing to solve their business problems or to get help in running their business. Especially for new companies, outsourcing is an excellent way to get started and gain a competitive advantage.

If you are considering outsourcing as your next step, then this article is for you. It should help you answer the question of when outsourcing is the right choice for you.

How the outsourcing relationship will change in 2021?

Today, companies are looking for ways to reduce their vulnerability to the global economy's volatility and be innovative while remaining agile and flexible. As a result, the connection between companies and their outsourcers is changing.

People and processes

In the past, outsourcing relationships were driven by price. Today, they are evolving to be people- and process-oriented. Companies are looking for the best developers to meet their business needs. Scrum and Agile will become more common because of their focus on the development process.

Strategic relationships

Companies are moving to single-source outsourcing because it is easier to manage one offshoring company. Companies are looking for long-term partnerships with highly cooperative outsourcing providers to share risks and align business direction. More and more entrepreneurs are outsourcing not only their core tasks but also all time-consuming processes.

More customers and small businesses

If we look at how outsourcing service providers will change in the coming years, we will see an increase in small businesses and start-ups. Infinite and more firms will opt for outsourcing choices, which will make the market more saturated and competitive.

Greater flexibility

Outsourcing providers will create agile teams that will be able to deliver work faster in the future. It will be integrated into the enterprise and work as an internal team. Companies are looking for innovation and expect the latest technologies and solutions. That is why our IT experts are taking a more agile approach.

Diversity of services   

Outsourcing used to focus on small-scale operations, but today large-scale operations are being outsourced and gaining recognition.

Agile development

According to PMI, more than 71% of companies have introduced agility into their daily business and operations. Companies appreciate the flexibility of project management and want to use it for software development. They are looking for experienced partners who adopt agile practices and are willing to share their expertise.

Technology outsourcing trends in 2020

According to Statista, more than 2.14 billion people will buy goods and services online by 2021. This means that there will be a meaningful technological transformation as new trends and technologies emerge to support e-commerce.

AI, IoT, and robot process automation

AI-powered networks will use AI-powered networks to increase the quality of customer service. It will help e-commerce platforms by analyzing customers' purchases and habits. AI-powered chatbots will also make their appearance - promising to replace human counterparts in providing advice and guidance.

Also, the number of companies executing RPA will increase. In 2020, we will see more computerization for logistics management, payment processing, and ERP management.

Cybersecurity and GDPR compliance

With the growth of cybercrime, social media plays an important role; cybersecurity is gaining investors. Attacks are even increasingly targeting governments.

It is predicted that the US will need to spend .8 billion to be GDPR-compliant, and only ⅓ of tech companies are rolling up their sleeves to do so. Each year, it will become increasingly important for companies to meet security requirements.

Cloud data storage

The SaaS, IaaS, and PaaS markets are growing by 24% each year. Companies are investing even more money in the development of the cloud.

When is outsourcing the right match for you?

There is no uncertainty that outsourcing gives you the path to the international talent pool, saves costs, and speeds up the development process. A few situations where outsourcing is the perfect solution; read on to find out if it was the right match for you in 2020.

Lack of technical knowledge or speed

Outsourcing will be the best match for you if you lack professional experience or if the local talent pool cannot provide you with experts. Sometimes projects require specific skills that are hard to find locally.

Speed or flexibility is also often an issue. If you choose to outsource, you get a flexible team of available engineers.

Stop micromanaging

Outsourcing is an excellent way to avoid so-called micromanagement. Project managers often oversee unimportant details while possibly ignoring the relevant ones. This is not only time-consuming but also tiring. As a manager, you can probably add more content to higher-level responsibilities. It will help you focus on business characters such as marketing, fundraising, or sales. With outsourcing, experts handle all IT decisions to concentrate on taking the business to the next level and gaining a competitive advantage.

Reduce costs

By choosing to outsource software development services instead of hiring an in-house team, you can significantly decrease growing costs. This way, you avoid wages, rewards, bonuses, and other hidden costs required to keep satisfied representatives.

Any of the SDHs own R&D departments that research new technologies that can deliver cost savings and business value that your competitors will only get years later.

Stay innovative

Working with a software development house ensures consistent innovation. Outsourcing companies need to stay competitive in the marketplace, so they are continually exploring new opportunities. With multiple projects they have worked on, they have a more extensive knowledge base. The right outsourcing provider is always up to date with the latest solutions and technologies, so you can be sure to keep up with the market.

Keep innovating

By working with a software development company, you ensure that you are constantly innovating. Outsourcing companies need to stay competitive in the market, so they are continually looking for new things. Because of the multiple projects they have worked on, they have a broader knowledge base. The right outsourcing service provider is always up-to-date with the latest solutions and technologies, so you can make sure you keep by the market.

High standards

SDHs offer specialists in a wide range of technologies. Thus, with just one contract, you have access to a variety of specialists. Reputable software development companies hire people with excellent training and established knowledge standards. They create growth paths for their employees, as well as mentoring programs and skills assessments.

Outsourcing allows you to outsource not only developers but also C-level specialists such as CTOs. This gives you advantages such as getting impartial advice from a high-level professional. You will get a new perspective and implement appropriate workflow and agile principles.

Conclusions

The year 2021 is the beginning of many new trends in software development outsourcing. Especially now, in times of a global pandemic, it has proven to be the right path. It has enabled companies to shift gears in immediate response to market changes.

The 2020s have also shown that teleworking is possible, even where it was thought to be the hardest to achieve. More and more young companies are choosing to run their business by outsourcing most of their processes because this is profitable and involves less risk. In addition to this, we see companies shifting their focus to people rather than price, seeking strategic alliances, and moving to an Agile approach.

Artificial intelligence will be even more recognized in the developing world and benefit both e-commerce and customer service.