Do you know 50 million businesses are given birth every year? You will be shocked to know that approximately 50% of small businesses fail within the first five years of their business. This clearly shows a loophole in the business process. 

Now that we will be soon dealing with the aftermath of the COVID-19 pandemic, we will probably see more businesses dying. The economic impacts of the novel coronavirus will create a graveyard of failed startups, small-scale businesses, and even a few large-scale enterprises. How will your business prevent itself from making a place in this graveyard?

Here the need to optimize the business process arises. The prime weapon applied to achieve such optimization is IT services. This has given a major boost to the IT outsourcing sector.

According to research by Technavio, the rising need to optimize business processes will be the key driver for the IT outsourcing market. It is estimated that during 2019-2023, the IT outsourcing market will grow at a CAGR of 4.42%.  

Present and Future of IT Outsourcing

Undoubtedly this growth is contributing towards revolutionizing the way industries operate. Are you coping up with these changes successfully? Today is the age of moving ahead of time to survive in the cutthroat competition.   

Even if you are incorporating the latest tech trends including machine learning, IoT, artificial intelligence and many more in your business processes, it is not enough. You need to find a way to achieve perfection at a minimal cost.

For this purpose, IT outsourcing companies are being hired by businesses all around the globe. There are various benefits that a smart business person can reap by hiring an efficient software outsourcing firm

Benefits of IT Outsourcing

Save infrastructural cost

If you hire software developers, your investment in giving them the right infrastructure to develop your software will get saved.

Save the cost of in-house software developers

Every business is not required to hire developers full-time in their office. Hiring full-time employees add to the cost even if there is no need for software developers. 

IT outsourcing services

Enhanced efficiency

When you hire software developers who have extensive experience in your niche, you will never face any issue of low-quality outcomes. 

No time boundary

Your hired software developers in the outsourcing company will work even when you will be off for the day. 

Focus on Core process

If you will get your projects outsourced, your energies will be free to use somewhere else which cannot be outsourced from anywhere. It gives you time to invest in core areas like branding.  

These benefits of IT outsourcing are the reasons why a huge investment is done every year in these services. It is estimated by Statista this year, the spending on IT services will reach 1, 088 billion U.S. dollars. 

IT services spending 2019

The present-day market scenario of the IT outsourcing industry is equivalent to perfection. It can offer you ample benefits to revive or sustain your business processes. But this industry is dynamic which expects the businesspersons to walk along with the changes it witnesses.

The future is uncertain but here is an attempt to find out the top trend that will be prevailing in the IT outsourcing industry. These changes are mainly directed by technological advancements which are enhancing tremendously.

Top future trends of IT outsourcing

  1. Increase in automation outsourcing
  2. Need for more specialization
  3. Cloud sourcing
  4. Increase in AR/VR service needs
  5. Introduction to new business models
  6. Less attention on cost
  7. Demand for cybersecurity and compliance
  8. Rise of New outsourcing destinations

IT outsourcing Trends #1: Increase in automation outsourcing 

Automation has made human lifestyle highly convenient. In contemporary times, automation is embraced in all major arenas from enterprises to homes. Technologies like Artificial intelligence and robotic process automation are in great demand these days.

The market for artificial intelligence is predicted to reach US$ 190.61 billion by 2025. The huge investment has created the need for artificial intelligence project developments. The overall demand for AI experts, data scientists, and big data analysts are rising at exponential rates every year.   

business process optimization

IT outsourcing Trends #2: Need for more specialization

Gone are those days when the software was created just to take your business online or to make it compatible with the latest industry happenings. Today, businesses are getting dependent on their applications for core processes

For this, they require Custom Software Solutions according to their individual demands. The skills of developers have become an important factor in choosing an IT outsourcing company. It is assumed that in future the requirement for polished skills will increase.

Businesses have forgotten to compromise with quality. The need for personalization of services and products have motivated developers at varied locations to improve their skills, communication and innovation power. 

Here is a tabular representation of the skill rating of developers in different outsourcing destinations. 

Top IT Outsourcing countries
HackerRank and TopCoder are the two rating organizations that have ranked the skills of developers at different IT outsourcing destinations. Businesses are choosing the destinations with the most skilled developers irrespective of the geographical boundaries. 

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IT outsourcing Trends #3: Cloud sourcing

Enterprises are transforming digitally which has resulted in greater public cloud adoption. By 2020, 83% of workloads of enterprises will be on the cloud according to the finding of the LogicMonitor’s Cloud Vision 2020: The Future of the Cloud Study.

In their findings, it was concluded that AI and ML will be the greatest catalyst in increasing cloud computing adoption by 2020.  This will require IT outsourcing service providers to develop more online data centers and equipment.

With cloud computing, the security issue will increase. 66% of IT professionals think that security will be the primary concern while adopting cloud computing. Ultimately, expert knowledge of professionals working in IT outsourcing companies will be considered to save businesses from the loss caused by possible data breaches. 

Importance of AI and ML

IT outsourcing Trends #4: Increase in AR/VR service needs 

Overall AR/VR headsets sales to reach worth US dollars 9.7 billion by 2020. The not-so-old technology has allured customers of all sizes. Businesses in all industry domains, from healthcare to e-commerce are incorporating these technologies to add another reality to their products.

According to a survey, 73% of mobile AR users are satisfied or highly satisfied with their experiences. This paves a safe and healthy future for these technologies. In future businesses are going to invest in AR and VR projects incredibly. 

These technologies have boosted online shopping experiences, social networking sites, entertainment apps. There was still a lot of potential to be explored. Small businesses are turning up these technologies to offer something unique to their customers. 


IT outsourcing Trends #5: Introduction to new business models

IT Outsourcing business models

Ideas have become the essence of software industries. If you have an idea of getting a custom app developed, it will solve half of your problem. This is why in future businesses will shift to business models that will safeguard their idea. 

New business models in the IT outsourcing industry will be based on outcomes rather than outputs.  Do you know the difference between the two? The output is the result of the organization’s activities and the outcome is the level of success achieved by these activities. 

This will increase the pressure to deliver impeccable results to the software developers. The future models will also be witnessing contracts wherein the risk and responsibility will be shared among businesses and the IT outsourcing partner. 

IT outsourcing Trends #6: Less attention on cost

As I have written that business models will be more focussed on quality rather than the mere completion of work. Along with this shift, the focus from cost has also shifted. Businesses will no longer run behind the lowest cost quotation by software developers. 

Although we cannot deny that a true businessperson will always focus on cutting their expenditures. But the value delivered has taken the place of primary concern. An ideal IT outsourcing company will be the one with skilled labors and outstanding outcomes at the least cost. 

Here is the cost of developers and QA in different popular IT outsourcing destinations. 

Cost of developers in Top IT Outsourcing countries

Along with this, you can match the skill ratings of the app developers in different locations. The quality-price match can be an ideal choice for any business developer. For example, India is a destination with low-cost developers and placed at a considerably good rank among different destinations. Such combinations are in high-preference for developers. 

IT outsourcing Trends #7: Demand for cybersecurity and compliance

When it comes to the industry of information technology, security becomes a primary area of concern. Since its inception, this industry has been facing threats and thefts. When top-notch companies like Facebook witness such security issues, it brings fears into the SMEs and startups as well.

This has raised awareness among businesses which has turned into a demand. Companies demand that high-end security measures should be taken while developing an application for their business.  

Cyber attack preperation

One of my friends started a startup for an e-commerce store. He was not well-informed about the security checklist that should have been followed by his hired web developers. Once he got his web app developed, he faced issues in the payment gateway. The sensitive data like card details of customers who were logged into his e-commerce site started getting leaked. 

This is a very small experience that I have witnessed very closely. A business can face a lot of such issues when it comes to security. This is why 66% of IT professionals think that security will be the primary concern while adopting cloud computing. 

Cyber Security

The data encryption still has a long way to go. Cybercriminals have not and still not leaving any stone unturned in attacking the sensitive data.  IoT devices are at the most vulnerable position when it comes to cyber-attacks.

According to a report by Spiceworks, only 36% of IT professionals are confident in their ability to respond to cyber-attacks. This is quite scary! If the IT professionals are unsure then who are we relying on the safety of our data onto! 

Undoubtedly, in the future, the demand for optimum security from IT outsourcing companies will be on a rising spree.  In order to survive in the competition, it will become a necessity for IT outsourcing companies to provide highly secure applications. 

IT outsourcing Trends #8: Rise of New outsourcing destinations

The major destinations for IT outsourcing are located in Eastern Europe, South America and Asia pacific. These are the top destinations mentioned in the table below.

Top IT Outsourcing Destinations

These locations have the largest share of global outsourcing revenue. Today India and China are the leading destinations among these fourteen locations. The export of the IT industry of India in 2019 is expected to reach 135-137 billion US dollars.

But it is being speculated that in future years central and eastern European countries will provide stiff competition to China and India. As of now, according to a Deloitte survey, 59% of the respondents are already outsourcing their custom software development services from India. Here is the complete graph of their findings:

Companies outsourcing software development services

Although, in my opinion, India will continue to lead the IT outsourcing destinations with maximum projects. Few reasons for the same are:


  • Supportive policies by the Indian government for IT companies: Every year, the government of India provides schemes for the fiscal benefit of IT companies. Moreover, it has also recognized IT as of the 12 champion service sector. 


  • Indian companies follow international quality standards: Some of these standards are the International Standards Organization (ISO 9000), Six Sigma Quality Certification, Total Quality Management (TQM), etc.


  • The abundance of developers: According to Statista, India has the second-largest number of Android developers in the world. 


Mobile app development costs worldwide

  • Moreover, India has the most hardworking force: In a survey, 69% of the Indians expressed satisfaction in working for 6 days a week. It is a strategically right decision to invest in mobile app developers in India in 2020. It can be summed up that India will emerge as an even more flourishing IT outsourcing destination for businesses all over the globe. 

Wrapping Up

These top future trends of IT outsourcing promises a bright future not only for top-notch brands but also for startups and SMEs. The COIVD-19 outbreak is making it more difficult than ever for businesses to operate and develop software products in-house. Undoubtedly, this is the golden time for businesses to avail of the benefits of IT outsourcing.

The need for innovation has kept businesses as well as IT outsourcing companies at toes for a decade. After reading the top future trends of the IT outsourcing industry, I am sure you would be imagining ways to explore the opportunities for your business. 

I hope all your confusions regarding outsourcing software developers in India have settled down by now. If you have something to share about the IT outsourcing market then you are welcome to write to me in the comment section below. 

I welcome your reviews, suggestions, and appreciation. Let’s exchange our ideas and knowledge to have a better view of the present and future of the IT outsourcing industry! 

Present and Future of IT Outsourcing



Present and Future of IT Outsourcing

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