If there is an industry that has been able to withstand the most complex and disruptive global events, it’s the IT. This market continues to grow, even in the face of political, economic and energy crises, pandemics and climate change, among other challenges.
However, by having to constantly adapt to new challenges, the IT market continues to reinvent its practices. Outsourcing continues to be one of the most valuable, as it allows companies to reduce risks and costs, while maintaining or increasing their productivity.
In 2023, these are the IT outsourcing trends to keep an eye on.
1. NEARSHORE SURPASSES OFFSHORE
Having a team of expert software developers at competitive prices, high-quality IT infrastructures and the same or a similar time zone, makes Nearshore more desirable than any other form of outsourcing.
In 2023 it’s a fact that companies prefer to develop their projects with remote Nearshore teams (rather than Offshore ones), a service that Alter Solutions provides with distinction.
2. FOCUS ON CYBERSECURITY
The numbers are overwhelming: since the COVID-19 pandemic, cybercrime has increased by 600%; the United Nations estimate that a cyberattack occurs every 39 seconds; also, cybercrime is predicted to cost companies around the world an estimated $10.5 trillion a year by 2025.
Therefore, it’s natural that cybersecurity is a growing concern for companies, also because with most of their employees working from home (and using their personal network connections), companies are more vulnerable to cybercriminals.
As such, securing their network infrastructure and data has become an IT top priority for companies – by 2023, 65% of businesses plan to increase their investment in cybersecurity.
Outsourcing this type of service has been gaining ground, as it allows companies to get 24/7 protection (which, with an in-house team, would be more difficult), a faster response to potential incidents, and while saving in the long term (since the outsourcing cybersecurity team can be adjusted as needed).
3. BETTING ON ARTIFICIAL INTELLIGENCE (AI) AND MACHINE LEARNING (ML)
Among today’s trending topics are, without a doubt, Artificial Intelligence and Machine Learning. Trends like these are here to stay and are not only changing the way we live, but also redefining the way we work.
When it comes to IT outsourcing, Artificial Intelligence has been particularly standing out, as it provides greater work efficiency through automation, cost reduction, greater security and control over processes.
The numbers don't lie: the global AI and ML outsourcing market was valued at $136.55 billion in 2022, and is expected to grow at an annual rate of 37.3% between 2023 and 2030.
4. GROWING REQUEST FOR THE INTERNET OF THINGS (IOT)
Smartwatches, smart household appliances, televisions or cars. These are examples we all know of the famous Internet of Things (IoT) - a network of interconnected devices, machines or objects, with the ability to transfer data between each other over the Internet, without the need for external human interference.
Valued at $243.1 billion in 2022, the global IoT market is estimated to hit $575 billion by 2027, with an annual growth rate of 18.8%.
Companies have been increasingly investing in IoT technologies due to their undeniable advantages: improved customer experience and employee productivity; business monitoring with a greater level of detail; increased revenue; time and money savings; among others.
As is the case of cybersecurity and AI, outsourcing has grown as a method for developing IoT products and services, given its inherent flexibility and more affordable costs.
5. CONTINUOUS GROWTH OF BUSINESS PROCESS OUTSOURCING (BPO)
Business Process Outsourcing (BPO) consists of outsourcing processes, operations and responsibilities of several back-office (accounting, IT services, human resources, compliance, among others) and front-office roles (sales, marketing, among others).
The global BPO market has been growing greatly in recent years, but in 2023 it promises to take a new leap: while in 2022 it reached a value of $261.9 billion, it’s expected to grow at an annual rate of 9.4% between 2023 and 2030.
It’s only natural that it does, since the benefits for companies are undeniable: greater flexibility, lower costs and better quality of the services provided.
6. STRENGTHENING OF OUTSOURCING TIES
In the years leading up to the COVID-19 pandemic, it was common for companies to establish outsourcing relationships with multiple suppliers. However, the instability that has been affecting the market since then – not only due to the pandemic, but also to Brexit, the war in Ukraine, climate change, inflation, among others – makes investment in the IT sector happen in a more moderate and restrained way.
In 2023, it is clearer than ever that the constant change of outsourcing partners can harm companies' productivity. Therefore, the trend has been to opt for long-term strategic outsourcing partners, in order to guarantee security and business continuity. Also because partners with whom there is more commitment and trust are partners who share the same goals as the client, and are not simply service providers.
7. REINFORCEMENT OF THE HYBRID WORK MODEL
Although the popularity of remote work had been gradually increasing in some countries in recent years, it took a huge leap during 2020, as companies all over the world were forced to adopt remote work policies, in an effort to contain the pandemic. But what began as a temporary measure is looking more and more like the future of work for most organizations.
The hybrid work model – a middle ground between pure remote work and 100% on-site work - has been gaining momentum as it translates into gains for both employees and businesses.
Employees are guaranteed an ideal dose of flexibility, which contributes to their satisfaction and motivation. On the other hand, the company enjoys a greater employee retention, the reduction of monthly expenses and the possibility of hiring talents from all over the world, with diverse skills and levels of expertise (outsourcing may be, once again, a key element in this aspect).
We also know that over 75% of EU employees want to continue working in a hybrid model in the long term. And if there is a sector where remote or hybrid working is possible, it’s definitely IT. Remote job applications have more than doubled since March 2020, with technology being one of the top three most in-demand areas in this segment, LinkedIn estimates.
8. GREATER FLEXIBILITY AND AGILITY
Given the fast growth of the IT sector and the unpredictable obstacles that the world and the market have been posing, companies are increasingly valuing Agile methodologies and the ability to readapt to circumstances.
Flexibility is precisely the keyword of outsourcing: there are no geographical borders; the pool of top talent is wide; project duration and team size are easily adjusted; and the response time is unbeatable.