In the ever-evolving world of technology, software development outsourcing has become a crucial strategy for businesses looking to stay competitive, cut costs, and access specialized expertise. As we step into 2023, it’s essential to take a closer look at the latest trends and statistics surrounding software development outsourcing. These insights can help organizations make informed decisions about outsourcing partnerships and strategies.
In this blog, we’ll discuss the key statistics that throw light on the present Software Development Outsourcing scenario in 2023. So whether you’re a developer or a business owner planning to outsource your software needs, this blog will help you know about the industry’s current state. But before that let’s discuss what is software outsourcing in detail.
What is Software Outsourcing?
Software outsourcing means hiring a third-party company for developing and maintaining software applications the clients. Businesses often outsource the work to the experts to reduce the costs, boost efficiency, access specialized skills, and target new markets. Software outsourcing consists of various services including custom development, maintenance, testing, and integration. The most common software outsourcing services consists of software development, application development, and IT services.
With growing complexity within businesses, companies either outsource the entire software development process or some part to the experts. By levering cloud computing as a key aspect of software outsourcing, companies can easily access software applications and services from remote servers.
IT Outsourcing Statistics
- More than 60% of businesses in the US outsource at least one department.
- IT outsourcing market is expected to spend more than $1.3 trillion by the end of 2023 as more companies adapt digital transformation.
- 1/4th of small size businesses outsource their requirements to boost efficiency.
- 70% of companies find outsourcing affordable rather than hiring an in-house team of experts.
Key Stats About Software Development Outsourcing in 2023
Increased IT Budget Allocation
In 2023, a significant number of businesses are prioritizing software development outsourcing in their IT budgets. Approximately 63% of organizations plan to allocate a substantial portion of their IT budget to outsourcing software development projects. As per the latest industry reports, worldwide IT spending is expected to touch $4.6 trillion mark by the end of this year, marking an unprecedented surge in demand for digital transformation solutions. Also, this clearly reflect the strategic significance that businesses attach to outsourcing as a means of achieving their IT goals efficiently and cost-effectively.
The rapid growth in IT spending is due to the increasing adoption of emerging technologies like Artificial Intelligence, Machine Learning, Internet of Things, Cloud Computing, etc.
Focus on Cost Efficiency
Cost reduction remains a primary driver for outsourcing software development projects. In a competitive business landscape, most of the companies have cited cost-efficiency as the main motivation behind their outsourcing decisions. Outsourcing let businesses enjoy access of skilled talent at a lower cost compared to maintaining an in-house development team, contributing to substantial savings.
AI Growth
The AI industry continues to make significant advancements, and according to the experts, this trend will continue for the next several years. With an annual growth rate of 37.3% projected from the period between 2023 to 2030, the AI market will expand rapidly, transforming industries and revolutionizing the way we live and work. With more businesses investing in AI technology and exploring new applications, we can expect to see a surge in the use of AI-powered systems in areas such as healthcare, finance, transportation, and manufacturing.
IT Talent Shortage
The scarcity of IT talent continues to be a pressing concern for organizations globally. The majority of businesses have faced challenges in finding and retaining suitable IT professionals with the right set of skills. The talent shortage issue faced many companies urged them to outsource software solutions to bridge the skills gap and access to a global pool of experienced developers.
Cloud Computing Usage.
As of 2023, the percentage of corporate data saved in the cloud has continued to rise, with 60% of all data now being stored remotely. This shift towards cloud-based storage has resulted due to the advances in technology and increased awareness about the benefits of cloud computing, like improved scalability and flexibility, improved security, and reduced infrastructure costs. With more businesses going digital, the dependance on data analytics, cloud storage is also expected to increase, making cloud computing solutions an important component of any modern organization’s IT strategy.
Offshore Dominance
Offshore outsourcing continues to be the most preferred choice especially for the organizations looking for cost-effective solutions. In 2023, close to half of the businesses opt for offshore development centers as their outsourcing destination of choice. Offshore locations offer cost advantages, a vast talent pool, and time zone advantages that make them attractive options for software development projects.
Also, by collaborating with nearshore companies, small size businesses can get access to latest tools and technology they need to grow their businesses without burning their pockets. This trend is expected to continue as small businesses seek more cost-effective ways to stay competitive in the global marketplace.
Outsource Software Development to Kodehash Technologies
Kodehash Technologies is a renowned software development company providing outstanding solutions to businesses across various industries. We are a team of highly qualified and experienced developers offering customized software solutions to all the clients as per their unique needs.
At Kodehash Technologies, we stay updated about the latest software development trends and statistics to ensure maximum satisfaction. Our commitment to quality, innovation, and customer satisfaction has helped us served to several clients. To know more about the software development services we offer, contact us now!