Articles | January 30, 2020
Main IT outsourcing trends in 2020
At the beginning of each year, we all try to make predictions for the upcoming months. It is impossible to predict the future – but certain forecasts can be made. We have been operating on the outsourcing market for almost two decades now, witnessing several changes in that time, which has made us attentive observers of the software development industry.
Top trends in IT outsourcing in 2020
What are the trends that can shape the IT outsourcing industry? What might be the reasons for outsourcing software development in 2020? Read the article to find out!
Wider range of outsourcing services
A survey conducted by Deloitte last year on cyber transformation and cyber risks proved that “many organizations need a little bit of help in a lot of places”. Operating in the outsourcing industry, it is hard not to agree with that statement, especially taking the increasing number of quickly developing tech solutions into consideration. There is a wider range of disruptive, developing technologies offered by outsourcing companies, and most of the technology solutions complement each other. Artificial Intelligence and Machine Learning, Internet of Things and the cloud, Robotic Process Automation and AI – these are some of the top “tech star couples”. Outsourcing companies respond to market needs here, providing a more extensive range of software development services and reshaping their offer accordingly. We believe that a broader range of IT services will become one of the most important IT outsourcing trends in 2020 and beyond.
When deciding on technology outsourcing services, businesses should not overlook the importance of political and economic stability of the countries which they outsource software development to, either in the offshoring or nearshoring model. According to Gartner, geopolitical tensions are causing doubts in terms of service delivery stoppages or potential issues. As per company predictions, 65% of bigger businesses will have multisourcing strategies implemented by the end of 2023, meaning IT specialists located in multiple countries. According to CBI report, political stability is a highly relevant aspect in terms of choosing a country for nearshoring and offshoring.
Strategic planning here should include:
- the identification of potential risks,
- failsafe contingency plans,
- ISO 27001 certification.
Multicultural outsourcing is a measure that might not only minimize the risk of service delivery disruption. The hidden value we get here is a cultural and knowledge exchange between IT partners. We believe that European geopolitical stability will foster the development of outsourcing services in 2020 in this part of the world.
Innovation-driven software development outsourcing
In the end, it is innovation that drives everything about the business. As part of the Digital Europe Program, the European Commission has proposed to invest 9.2 billion euro for 2021-2027 to facilitate digitalization in European countries. The aim of the funding is to boost the development of emerging technologies and foster the development of digital skills. According to available resources, the talent shortage in ICT is a major topic of discussion, and companies willingly outsource software development to external IT providers to innovate. Is it possible to innovate without the cloud nowadays? Or without implementing intelligent AI-based solutions or smart IoT devices? The outsourcing sector has been responding to these questions for the last couple of years and we predict that this will be one of the strongest IT outsourcing trends in 2020.
More emphasis on partnerships
Recent years have shown that outsourcing is increasingly perceived as a way of gaining access to an inaccessible skillset. We can summarize this approach in one sentence, which is not far from a universal truth: the real value is people, not money. It looks as though companies nowadays are simply more development-oriented than driven by cutting costs, hence the emphasis on the value of professional skills. Outsourcing companies ensure access to talents, and teams are built in such a way as to ensure smooth cooperation.
As observed in our own teams, the boundary between clients’ employees and our specialists often disappears. Agile solutions are often used here since they facilitate the exchange of ideas and improve communication – including in dispersed teams. Based on our observations, we believe that a business partnership is an added value of outsourcing that may increase in importance in 2020 and beyond.
More focus on Eastern Europe
The CEE region has huge investment potential. Investors are willingly outsourcing software development to the selected countries in Eastern Europe. Poland, Ukraine, Bulgaria and Romania become important outsourcing destinations due to the high quality of provided services and access to competencies that are in demand. The countries of Eastern Europe develop rapidly, providing a wide range of software development services using top technologies:
- Cloud computing
- Robotic Process Automation
- AI and Machine Learning
- Internet of Things
- and many other disruptive technologies
Outsourcing trends: summary
We believe that our predictions of the top IT outsourcing trends in 2020 will help many businesses to deepen their understanding of outsourcing and recognize trustworthy service providers and the best outsourcing destinations.
The digital transformation including e.g. cloud computing services is picking up speed and the market is not slowing down. Companies seeking a trusted partner should consider focusing on multicultural providers delivering a wider variety of services. They are likely to be a suitable partner in terms of digital transformation in 2020 and beyond.