IT Outsourcing Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

The IT Outsourcing Market size is expected to grow from USD 585.57 billion in 2023 to USD 701.88 billion by 2028, at a CAGR of 3.69% during the forecast period (2023-2028). Key Highlights.

New York, Aug. 10, 2023 (GLOBE NEWSWIRE) -- announces the release of the report "IT Outsourcing Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)" -
The IT Outsourcing Market size is expected to grow from USD 585.57 billion in 2023 to USD 701.88 billion by 2028, at a CAGR of 3.69% during the forecast period (2023-2028).

Key Highlights
With digital transformation, organizations have become dependent on the success of creative applications and extensions that IT could provide. More certainly, IT has become a critical competitive edge for most organizations. Moreover, IT outsourcing has become more than a simple cost-reduction technique with the migrations and options of cloud services. Therefore, this new form is driven by organizational motivations regarding business growth, customer experience, and competitive disruption.
Multiple studies have suggested that Application Development and Maintenance have become the most frequently outsourced functions amidst the partial IT outsourcing trends. For instance, in 2021, Accenture PLC reported an increase in the revenue in its outsourcing business by 15% compared to fiscal 2020. The company also said that growth in outsourcing revenue was led by strong growth in North America and other markets, with solid growth in Europe.
Leading IT companies are experiencing growing demand to assist clients with application modernization and maintenance, cloud enablement, and managed security services. In addition, clients continue to be focused on transforming their operations through automation and AI, data, and analytics to drive operational cost savings and productivity.
Looking at application development, companies such as Slack, GitHub, Alibaba, and WhatsApp have successfully leveraged the benefits of outsourcing development. In its initial days, WhatsApp resorted to Eastern Europe for tech talent to keep operation costs low. It hired offshore developers from Russia for the software build and kept its in-house employees focused on customer support and operations.
Many established and technologically driven players are present across regions. The development of specializations has led to market fragmentation with the vendors studied. With many options to choose from, the rivalry is also expected to be on the higher side as multiple strategies have been adopted to enter new emerging markets and acquire/partner with allied technology-driven companies.
The growing adoption of cloud services since the outbreak of COVID-19 is expected to create a favorable market scenario for the growth of the IT outsourcing market as enterprises using such services often outsource the maintenance and portion of development work to third parties.

IT Outsourcing Market Trends

Ongoing Migration Toward the Cloud and Adoption of Virtualized Infrastructure

Cloud migration and adoption software has led outsourcing customers to divert resources from low-value assets to specialized employees while focusing on more flexible, tailorable, and evolution-friendly solution.
Traditionally, IT outsourcing has been tangible, with servers, data centers, networks, specifications, person-hours, and lines of code deployed. With the rise of cloud-based services, more flexible, asset-free IT services are available on demand. On the other hand, cloud computing has also led to a fundamental shift in how companies pay for and access IT services.
Companies looking forward to outsourcing cloud services have regarded cost optimization as a significant aspect. Multi-cloud strategies, therefore, have been gaining momentum and allowing multiple providers to reduce concentration risk.
For instance, in November 2022, VodafoneZiggo, a provider of fixed, mobile, and integrated communication and entertainment services to consumers and businesses, has chosen Cognizant as its managed services partner to consolidate and support VodafoneZiggo’s IT operations, cloud infrastructure, and virtualized mobile network infrastructure.
There would be a rising need for IT outsourcing services specializing in cloud infrastructure and administration because firms are increasingly moving their operations to the cloud. In addition, IT outsourcing companies emphasize cybersecurity procedures in their cloud service offerings to protect their clients’ data and systems from cyberattacks.

Asia-Pacific Accounts for the Largest Market Share

China has been one of the significant outsourcing destinations. The outsourcing industry weighs benefits that the majority of US companies find attractive. Reduced development costs play a crucial role in retaining the original uses of outsourcing. King White, CEO of Site Selection Group, a global location advisor, believes that China has the potential to become one of the lucrative outsourcing markets that are even more cost-competitive than India.
Over the past two decades, the IT industry in the country has witnessed impressive growth and has become a key industry in the country’s overall economy. In the current 5-year plan, the government has significantly focused on making IT one of the seven strategic industries that will help the country move from a cheap-labor manufacturing outsourcing to a world-class, innovation-driven IT outsourcing.
India is one of the most mature global IT outsourcing destinations, with many options. The country has worked in this direction for over 25 years and has maintained its dominance among the top IT outsourcing destinations. With the demand for skilled software developers rising, IT outsourcing companies out of the country rapidly expand their operations worldwide. The cost factor and talented skill pool have played a key role in assuring the country’s dominance in the market.
Many global IT service providers are expanding their business in India to enable manufacturing companies’ productivity by managing their IT and network infrastructures, which is fuelling the growth of the market in the APAC region. For instance, in September 2022, Cloud major IBM and Bharti Airtel announced the launch of Airtel’s edge computing platform in the country. The Airtel edge computing platform backed by IBM Cloud would help Maruti Suzuki’s initiative to simplify plant productivity and quality operations.
Aditionally, Indonesia is gaining traction and offering similar IT outsourcing services, especially software development services. Home-grown software development providers have been growing. This has assisted the country in achieving a preference for being a nearshore/offshore software developer by opening up R&D centers.

IT Outsourcing Industry Overview

The IT outsourcing market is highly competitive owing to multiple vendors providing IT services to the domestic and international markets. To sustain in the market and retain their clients, companies are developing advanced technologies to play on the competitive edge, thereby intensifying the competitive rivalry in the market.

January 2023 - Accenture has planned to buy SKS Group, a consultancy company that uses SAP S/4HANA solutions to assist banks in Germany, Austria, and Switzerland in modernizing their technological infrastructure and satisfying regulatory requirements. The acquisition would increase Accenture’s capacity to provide specialized banks with technology, consulting, and regulatory services.
December 2022 - NN Life Insurance Company, a leading player in Japan for the SME segment, which provides innovative Insurance solutions, has partnered with Infosys for its Cloud and Agile Transformation. The company would leverage the Infosys Modernization Platform, part of the Infosys Cobalt suite, for end-to-end transformation to Azure Cloud, deployed agile processes and introduced cloud native capabilities for NN Life Insurance.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support
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