Top 5 IT outsourcing trends that will rule in 2021

Posted by olivia cuthbert on April 23rd, 2021

How to get IT outsourcing "right" in 2021? What can we expect as a result of the global pandemic? Will companies expand their partnerships with offshore software developers? What will IT outsourcing trends shape vendor-customer partnerships? Here is everything you need to know about IT outsourcing as a great way to thrive in the new normal.

The year 2020 has proven that we all live in a highly fluid environment where things can change dramatically at any time. But the past year has also taught us a good lesson - it has prepared us for crises such as the global pandemic and led us to be more adaptable, resilient, and flexible.  

How can companies cope with change? Here we have gathered the top 5 trends and statistics on IT outsourcing from trusted sources such as Technavio, ISG, Flexera, Gartner, KPMG, Atomico, etc., to help you succeed in 2021. Let's take a closer look at what a new year has in store.

IT OUTSOURCING IN 2021: KEY INSIGHTS

According to Technavio's IT outsourcing statistics, the value of the IT outsourcing market expects to reach 6.16 billion in 2024, growing at a CAGR of 5% over the period 2020-2024. 

Most organizations in all sectors are accelerating their digital transformation, particularly in fintech, healthcare, and telecom. Companies in these sectors are following IT outsourcing trends and are the most likely customers to seek IT outsourcing services. 

Cloud technology is on the rise. Companies will increasingly outsource cloud-related migrations, maintenance, security, compliance, and daily troubleshooting. According to Gartner, infrastructure services for cloud systems expects to grow from billion in 2019 to billion in 2022. 

The crisis caused by the global pandemic has influenced IT outsourcing trends in 2021. It has a significant impact on business decisions and technology investments planned for 2021. More and more companies of different sizes are planning to make greater use of IT outsourcing. From our experience, we can also confirm this trend. Some of our clients downsized their IT outsourcing teams or stopped IT outsourcing at the beginning of the pandemic. Still, a few months later, they resumed IT outsourcing and even expanded their development teams. Many of those who have never outsourced are planning to do so for the first time in 2021. Judging by the previous crisis in 2008, few companies will stop their outsourcing efforts. Even during the 2008 recession, only 9% of companies decided to end their relationship with IT outsourcing partners.

Drivers of IT outsourcing:

| Cost efficiency and quality

While cost savings will continue to be the primary reason organizations outsource, quality and technological excellence will become equally important. Companies have used outsourcing primarily to reduce overall labor costs, including wages, insurance, tools and supplies, and technology. But now, new IT outsourcing trends have emerged that focus on quality outcomes. As the competition among outsourcing companies increases, so does the quality of services provided. Companies tend to fire expensive local IT consultants and choose skilled IT experts in offshore countries.

| Lack of in-house talent

The IT industry has long suffered from a skills shortage. According to KPMG's 2020 survey, the global technology skills shortage remains significant, almost as severe as in the pre-recession era. By contrast, during the 2008 recession, the technology skills shortage declined more sharply. 

As the lock-in eases, there has been a surge in global IT recruitment. Companies will increasingly look overseas for technology partners to make the most of their investment. 

According to the ISG (Information Services Group) report, the European IT outsourcing sector will grow the most 2021. Eastern Europe is an emerging market for sourcing technology talent. And Ukraine will be high on companies' wish list for the most lucrative IT outsourcing destinations.

| Globalization 

Working remotely, COVID -19 has eliminated the borders between countries. It has accelerated the trends of globalization and cultural diversity that started a few years ago. Companies will continue to attract top talent from around the world even after the crisis. People who already work will not want to miss the opportunity to work for an international company while maintaining a work-life balance.

TOP TRENDS AND STATISTICS ON OUTSOURCING 

Given the global changes brought on by 2020, outsourcing trends for 2021 will include greater flexibility, diversity, and automation. The outsourcing trends for 2021 look promising, and the IT outsourcing industry can help companies meet new challenges due to the crisis.

1|  Technology skills requirements 

According to Burning Glass Technologies, quantum computing, connected technologies, fintech, AI & ML expertise expects to be the most sought-after job skills in the technology sector in 2021. Companies will also look for professionals who experience in automation, cybersecurity, and cloud. Demand for AI and Machine Learning skills is growing at a compound annual growth rate of 71% through 2025, with 197,810 open positions today. According to the Cybersecurity Ventures report, there will be 3.5 million available cybersecurity jobs worldwide by 2021. The cloud experienced rapid growth during the pandemic and has become more vital than ever. Thus, cloud skills are in demand as every tech company seeks agility to meet growing customer demand and ensure business continuity.

2| Strategic partnerships

Finding a reliable supplier and building productive relationships with remote teams is no easy task. 

While there has been a trend in previous years to outsource services within a single project to multiple providers.

Companies will focus more on outsourcing to a single provider in the coming years, which means they will want to avoid all the headaches and risks of managing multiple vendors. 

Companies will avoid outsourcing to various vendors instead of focusing on building partner relationships with one vendor. 

As supplier-customer relationships become more reliable, the difference between outsourcing core and non-core tasks will become less critical. Offshore teams will become part of the customers' organizations. Thus, they will perform any tasks necessary for the client's success.

Here at N-iX, we have built long-term strategic partnerships with several companies around the world. Currencycloud (8 years), Fluke Corporation (8 years), Lebara (7 years), Orbus Software (7 years), Vable (6 years) are among our most loyal customers.

3| Companies want suppliers to be more flexible 

As the nature of IT outsourcing relationships changes, so will the expectations of customers. They will want their suppliers to be flexible in several aspects. Firstly, they expect their suppliers to have the ability to move things up and down depending on their needs. So suppliers will have to be ready to restructure teams in the shortest possible time and be flexible to deliver results faster.

Companies will also look for IT outsourcing partners who can accept and quickly adapt to their business ethos. They will appreciate it if offshore developers can easily integrate into their company and feel connected to the internal team. 

Another thing that modern customers want is to keep up with innovations. Therefore, they expect their external IT specialists to be eager to adopt the latest technologies. They will also first consider vendors who are willing to invest in retraining their staff when necessary.

4| Regulatory agility

2021 will be full of new regulations. Therefore, service providers and technology companies must be flexible enough to adapt to contemporary standards. They must carefully negotiate contract clauses based on new procedures and back-end processes, considering all the costs that implementation may entail.

Their primary purpose is to stop the distribution of harmful content and to improve competition. Similar new regulations are already in place in other countries. so if you are looking for outsourcing you can contact top software outsourcing companies in India.