IT Outsourcing in 2022 – What Will Change?

February 17, 2022 Kevin Dabrowski

In 2022, IT outsourcing continues to grow stronger than ever. Statistics show that by 2025, the global IT outsourcing market will be worth $397.6 billion. And as boring as it sounds, the omnipresently discussed pandemic remains one of the key factors influencing this expansion.    

And although COVID-19 isn’t the only reason for the changing market, it’s affecting nearly every aspect of this growth. Trends like widespread digitalization, talent shortages, or a bigger trust in remote operations naturally stem from the sad events of the past two years.

However, growth isn’t the only change within the IT outsourcing industry.

 

 

 

 

In 2022, the talent shortage is only growing bigger – and it’s changing the way outsourcing is done

 

Even before the pandemic, the labour market was shifting from employee-oriented to employee-centred. In a sense, COVID-19 has only accelerated this trend. That’s why we’re now witnessing an unprecedented shortage of labour across many industries.

According to ManpowerGroup, 69% of employers found it hard last year to hire new talent in the US. Especially in the IT industry, the increase in unfilled open positions skyrocketed.

What’s more, this issue brought out another problem – the dire situation in recruiting talent skilled in niche specializations. As a result, this caused a slowdown in adopting modern technology. According to a Gartner 2021 survey, the shortage became a blocker in 64% of modernization cases.

Obviously, all these market changes are also strongly influencing the outsourcing landscape. In 2022, IT outsourcing is not only becoming more and more popular as an alternative to (the sometimes impossibly difficult) internal hiring, but it’s also somewhat re-shaping the way software is developed.

Because the hard truth is – the resources of software houses are also not unlimited. As a result, we can observe a shift from selling body leasing to offering problem solving more often. That way, software development companies can manage their (sometimes limited) resources more effectively. And additionally, also offer something different – usually way (way) better than the popular body leasing – because their clients are more open to accepting a new way of cooperating. After all, they don’t really have a choice. There may not be any extended teams available.

However, this shift is a long and complex story – that’s why we’ve written a separate article about it.

 

Make sure to read it here:
Don’t Write Detailed Specifications When Ordering Custom Software | PGS Software

 

 

In 2022, remote operations are embraced, not feared – so outsourcing is (will be) seen as a safe option as well

 

Before the global lockdown, only around 15% of companies in Europe offered their employees remote working arrangements. In 2022, around 62% of employees say they work remotely at least occasionally. What’s more, 16% of enterprises around the world are now remote-only.

Although this shift was forced by the circumstances of the past two years, it’s likely here to stay – probably even after the COVID-19 pandemic becomes a distant memory. And there are two main reasons for this.

First, remote work has proven to be effective. A Stanford University study showed that working from home led to an increase in productivity by 13%. Moreover, 85% of business owners declared the increased flexibility of remote operations raised their own efficiency as well.

Second, employees are also enjoying this new situation. 75% of remote employees said that working from home has had a positive effect on the balance between their work and personal time. 77% of them also declared they’re more productive when working remotely. And finally, probably the most powerful remote work statistics of today is this:

99% of people would choose to work remotely for the rest of their life – even if it was just part-time.

As a result, companies can be less afraid that remote operations will negatively influence their operations. Coupled with the shortage of available IT talent, this can further convince enterprises that teaming up with an external software partner is a viable (and safe) option.

 

In 2022, outsourcing isn’t only enterprise-focused – SMEs and startups are more likely to outsource too

 

According to various surveys, more than 50% of small and medium enterprises are relying on outsourcing to fulfil one or more business functions. And although IT itself isn’t on the top of the outsourcing popularity list, it’s bound to become just that.

With all the market shifts described above, new and/or smaller companies will find it hard to gather the joint experience to develop good software. Especially that digital products have grown into something more than just working code. Positive user experience (in a broad sense) is as important as ever.

And to create this positive experience, software should stem from the accumulated efforts of many professionals – like business analysts, UX and UI designers, product owners, QA experts, solution architects, and, finally, competent software developers.

For a small company to get such a wide array of professions on board is not only extremely challenging but hardly cost-effective too. Still, if a startup aims to succeed with a new digital product (or with a traditional service supported by a digital solution), it needs to be competitive – or even better than that. Consequently, IT outsourcing grows into a necessity to achieve this result.

 

In 2022, new technologies and IT trends will be increasingly important – and external partners will be ready to deliver them

 

With the rise of new technologies that aim at making business operations quicker, safer, and more efficient, software houses that offer dedicated IT outsourcing will be in high demand.

Among these new areas are the usual suspects of the last few years – like robotic process automation (RPA), cybersecurity, or IoT solutions. But the list goes on. Next to many AI-based solutions, the goal of these technologies is to do less manual work – and to do it securely.

Forward-thinking ideas like hyperautomation are regularly on Gartner’s annual IT trends predictions. It’s only a matter of time before they start shaping the technological landscape in many enterprises around the globe.

And due to their complexity and characteristics, external IT partners – next to leading industry brands – will be the first to excel at them. After all, a software house will get the chance to complete dozens of these projects for various clients, while an internal development team of one single company will have to either join with the necessary experience or learn everything from scratch. Both scenarios are far from easy, giving IT outsourcing providers a clear advantage.

 

Final Thoughts

 

In 2022, the pandemic remains one of the main drivers of the changes across a wide array of industries. It’s also redefining how IT outsourcing is done and perceived. The keywords include:

Problem-solving instead of body leasing. Remote operations in place of on-site presence. Agile, swift operations in smaller (but competent) teams. Expansion of niche markets. The rising popularity of IT outsourcing across smaller enterprises.

In our opinion, the future looks exciting for the IT world. Do you agree? Let us know on our LinkedIn profile!

 

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Sources: 
mortoff.hu/en/blog/top-5-outsourcing-trends-in-2022/178/
fortunly.com/statistics/outsourcing-statistics/#gref
hollandfintech.com/2021/04/omegalab-remote-working-101-why-its-so-effective-and-what-you-need-to-do-to-create-a-successful-remote-working-environment/