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software development outsourcing trends

10 Outsourcing Software Development Trends for 2021

With outsourcing for software development becoming the new normal for all industries, we all love to have a good read of outsourcing software development trends and find out what to expect for the near future. 

Since we’ve entered the third quarter of 2020, CMC Global thinks that this is the perfect time to start predicting the IT outsourcing trends for the near future. If you are a business owner or decision-maker, who is considering outsourcing, then CMC Global’s outsourcing software development trends overview will guide you through the most important ones.

1. The Shift in Outsourcing Relations 

strategic partnership for software development trends, CMC Corporation signs strategic agreement with Samsung SDS

Today, IT Outsourcing has become one of the most fundamental services of companies from Asia and African countries. With countless benefits, from cost reduction, free access to IT talents, and high production speed, this service has turned into an inseparable part of the client’s working routine. As a result, outsourcing vendors’ role in the high-tech field has gradually shifted from simple manual labor to top-level decisions on many important issues such as software architecture or full-cycle product development. 

With such entrustment, software outsourcing companies are no longer considered ‘agencies for developers hiring’. From an IT Talent connector, many vendors have turned into full-on strategic partners for entrepreneurs, aiming at long-term partnerships, shared risks, and business alignment. 

Read more: CMC Corporation signs strategic agreement with Samsung SDS – a IT giant from Korea.

This new trend of collaboration partnership is much more human-oriented. It focuses on cooperation and implementation quality, the process simplification but not the price. With such a strategic vision to help the reliable partner understand well their client’s processes, you can believe in the higher quality of the final product.

2. Alarming Shortage and Urge for Skillful Software Engineers 

IT talent shortage

The global spending on IT services in 2021 is expected to exceed over one trillion U.S. dollars, seeing a small increase of 5.5% due to the negative economic impact of the Coronavirus (COVID-19). But such a small gap is not the problem: the real issue lies in the shortage of skilled in-house expertise is predicted to be the core reason for most companies to outsource in IT. 

The problem is actually quite serious: according to research conducted by Robert Walters, totaljobs, and Jobsite in which they surveyed over 550 technology professionals, over 70% of UK technology employers are going to face a threat of talent shortage within the next 12 months. As for the US, the local universities are predicted to fail to cover a third of 1.4 million of IT job openings by 2020.

So far, new technology has evolved so fast that the demand for talent can not be met easily. With such extensive technology growth, IT companies are under the pressure of staying competitive in all kinds of services, from AI, cybersecurity to cryptocurrencies and blockchain. The overwhelming new technologies and shortages in employees have led to the cut-throat hunting for high-qualified human resources who own cutting-edge skill sets.

3. Businesses Will Start Spending More on Outsourcing Providers

bigger spending on outsourcing, top countries for outsourcing development

The thing is, you won’t turn to IT outsourcing if your local agencies or engineers agree to do the same thing with the same or lower price. Of course, everyone wants to optimize their businesses with a price-oriented mindset. However, the situation in 2021 is gradually changing. These outsourcing software development trends act as a natural consequence of the shortage of IT professionals. As high-skilled employees raise their rates, businesses will be forced to adjust their software development budgets.

Moreover, according to the Outsourcing in 2020 report of the National Outsourcing Association, product quality is now the main driving factor in outsourcing than cost reduction. A study has found that customer experience, improved security, and business expansion are what companies emphasize when it comes to outsourcing development.

So many Asia IT Outsourcing companies such as CMC Global turn to provide reliable long-term partnership, trust, and value. At the end of the day, the quality of the product/ services is the fundamental thing to evaluate one company, which requires more integration from the IT company to the services of their clients.

4. More Than One Outsourcing Provider at a Time

More Than One Outsourcing Provider at a Time

As IT spending becomes larger, big companies also tend to outsource software development wider. Yet the wider the scope of work is, the harder one can overlap all human resources, from top managers, skilled IT engineers, lousy sales, or creative designers. These problems lead to the solution of outsourcing to different outsourcing countries/ companies at once to have the best of both, or even several worlds.

According to the outsourcing trend data extracted by ISG, the number of outsourcing providers avoiding the model of multi-vendor has decreased from 42% to 15% within the last ten years. With niche services, they hope to bring more value to their clients with overall better customer experience. These outsourcing software development trends are highly appreciated by business owners, as the ISG data shows, 42% of the Forbes G2000 largest global businesses chose to outsource IT to single companies in 2008. Over a decade later, this figure declined to just 15%. 

However, this trend doesn’t equal the failure of large outsourcing providers with full-cycle software development services. For big vendors, gathering a diverse team and building thorough communication channels within departments and teams is definitely their advantage against smaller competitors. At the end of the day, perfect control over delivery and keeping minimal customer involvement throughout the tech processes are still of great importance.

5. High Demand for Blockchain Services

High Demand for Blockchain Services, outsourcing software development trends

In an IDC report published on The Cointelegraph, the Global Blockchain annual spendings are expected to reach $16 billion by 2023. This huge number means that this leading IT service will soon become the top global outsourcing software development trends. 

In all process and customer actions, the distributed ledger technology has its own advantages in enhancing security, transparency as well as being the innovative money-raising solution. As a result, the demand for knowledgeable and competent blockchain specialists is increasing in a wide range of industries, from private ventures to financial institutions. This, undoubtedly the chance for any outsourcing companies with a well-experienced team of blockchain experts. 

6. Business Process Automation in IT Outsourcing

rising business process automation

Another prominent technology application appearing in various spheres of our daily lives is the Business process automation, all thanks to the rise of robotic process automation (RPA) and its conjunction of artificial intelligence (AL).

The rising trend of workplace automation was predicted by CMC Global not long ago.

With the help of large outsourcing providers, you can effectively incorporate robots (bots) and virtual assistants in their working routine to replace the primitive and repetitive actions of human workers. According to the GSA report, over 80% of entrepreneurs strongly believe that RPA and AI will play the top important role in business by the end of 2020.

7. Cloud Sourcing

Cloud Sourcing trends in most important industries

The last trend in technology for outsourcing in IT is Cloud services. Today, to have everything posted on a cloud platform is the priority of many entrepreneurs, as a lot of projects (including many that are worth a trillion USD) are going to be passed to cloud storage for cost reduction purposes.

However, one thing to notice about cloud computing is their worrying cybersecurity. With such sensitive data that IT outsourcing may get exposed to, it is of top importance to outsource to a reliable and secured vendor to keep your user private info and details of projects protected.

8. A Growing Need for Increased Cybersecurity

For all enterprises, data has long become the most valuable resource, thus making cybersecurity the ultimate priority for all IT services, including outsourcing software development. 

A Growing trend for Increased Cybersecurity

As reported on UN Cyber Crime on Rise During Pandemic, the UN reported about “a 600% increase in malicious emails during the current crisis”. It is the growing digital dependency that increases business’ vulnerability to cyberattacks, as every 39 seconds, one cyber attack takes place around the world – analyzed by the UN on the same report.

So the demand is now making the data well-secured to not become the victims of a cyberattack. Thus, innovative outsourcing software development companies have now implemented multi-level security approaches to eliminate risks and guard business data.

According to research about IT Security Outsourcing Rises conducted by the Computer Economics, 47% of IT organizations are increasing their use of outside security services instead of relying on the in-house team alone.

9. The Emergence of Alternative IT Outsourcing Options

A Statista report about the Leading countries in offshore business services worldwide in 2019 shows that India and China are the leading outsourcing nations with about $150 billion in IT exports. In the meanwhile, places like Vietnam, Ukraine, Poland, and Romania are becoming the next-gen hubs for offshore software development. 

With a dynamic IT industry and thousands of IT outsourcing offerings, nations from the Eastern Europe area are now threatening competitors to traditional and popular options in Asia.

10. Fintech, Healthcare, and Telecom Industries to Be Significantly Digitized

You can find digital transformation everywhere, especially in specific industries such as Fintech, Healthcare, and Telecom. Even in this pandemic, these are the potential clients who are searching for outsourcing services. In the Fintech area, AI, Blockchain, or Peer-to-Peer transactions will become the new normal, while VR aided by AI is expected to dominate healthcare institutions in both the public and private sector, as an attempt to broaden the horizons of diagnostics. 

And finally, the impact of the 5G network on the Telecom industry is surely a tempting field where outsourcing companies fight to get their share of the 5G market. This trend will surely open the doors to unprecedented opportunities for massive connection to IoT networks.

When to Care about These Outsourcing Software Development Trends?

With our services and resources, most customers of CMC Global live up to the saying “Do what you do best, and outsource the rest”. There are indeed countless benefits that IT outsourcing can give your business, but does that equal everyone need to outsource? Below are some scenarios demanding to outsource. 

Lack of technical knowledge or velocity

Outsourcing is the solution for you if you lack technical knowledge or in short of IT talents locally. Velocity is also a thing to be considered, since getting a flexible team of available engineers is quite challenging in some countries or areas.

Outsourcing companies, especially those in technology hubs such as China, India, and Vietnam offer experts in a wide range of technologies. Not only IT Talents of different skills, but you can also have C-level specialists like CTO’s top-level professionals to gain a new perspective and set up an appropriate workflow and Agile principles.

Stop micromanaging

Outsourcing is a great way to stop wasting your time on micromanagement, which happens when your human resources have to supervise everything, even the unimportant details. This can lead to the possibility of missing out or ignoring the relevant ones. 

Choosing to outsource means you focus on optimizing your business and your core competencies with marketing, fundraising, or sales while leaving all the technical decisions to outsourcing experts.

Reduce cost

This is the main reason why companies turn to outsource. Having an offshore development team doing all the hard IT jobs for you instead of paying for the whole in-house team will significantly reduce costs, from bonuses, benefits, and other hidden costs to keep your employees happy and committed.

Stay innovative

Choosing to outsource for IT services will keep your ahead of the game thanks to the consistent innovation. This is how you constantly explore new competitive opportunities for your company thanks to a much larger knowledge tank.

A reliable outsourcing services provider is always up to date with the latest IT solution and market technology trends and it’s a pity you don’t take advantage of that.

Conclusions

This year 2020 is undoubtedly wild, all things considered. Good thing is, it is coming to an end in over two months, yet we need to have a comprehensive acknowledgment of the situation that we are in now to build the proper business strategy. These trends above are expected to affect the IT industry shortly, urging companies to change accordingly as an immediate answer to market trends.