In the last decade, a plethora of businesses have come up with some of the most innovative and unique tech product ideas. Implementing these ideas and building these tech products requires high-end technological expertise.

Naturally, not all businesses will have the right skills and the required technical knowledge to build a tech product efficiently. In this case, it is a great idea to take external help for your project from a skilled expert in the field. This is the reason why more and more tech businesses are outsourcing their IT requirements.

However, let us tell you that outsourcing is not a static concept and is always evolving, especially when it comes to the IT sector. In this blog, we have discussed the nine latest trends and innovations in the global IT outsourcing sector you should be aware of. By the end of the blog, you will be able to determine the best IT outsourcing practices and can use them to create a flawless IT outsourcing strategy for your business.

Let's start the blog by understanding what makes outsourcing a great option for building a tech product.

Why Outsource IT Requirements?

"Why should I outsource my IT project when I can hire an in-house development team?"

This is one question that many businesses have when told to outsource their requirements. Of course, recruiting an in-house development team is a common, more popular approach. However, there are numerous limitations to this approach that make IT outsourcing a better option for tech businesses.

For starters, recruiting an in-house development requires high capital investment. Moreover, with a large in-house team, the management has to spend a greater deal of time supervising a larger team of employees.

Outsourcing, on the other hand, is a great alternative in these matters and various others. Simply put, you can easily outsource your tech project to get a cost-effective and technologically sound solution. This factor has given rise to the massive popularity of IT outsourcing.

Let's understand more about the popularity of IT outsourcing through facts and figures.

Key Statistics on IT Outsourcing

• The market value for IT outsourcing is estimated to cross $430.50 billion by the end of the year 2023.
• The United States is the key player in the global IT outsourcing market, with a revenue contribution of $156.20 billion.
• The IT outsourcing market is forecasted to reach a global net value of $682.3 billion by the end of the year 2027.

These figures are a strong indication of the tremendous potential that the global IT market possesses. Therefore, it is safe to say that outsourcing is a great option for tech businesses to build a product.

In case you are convinced by this information and are also looking to outsource your IT project, let us tell you that doing so will require you to have some knowledge of IT outsourcing trends and practices. We will discuss these trends in detail in the upcoming section.

9 IT Outsourcing Trends to Watch Out For

With shifting business demands, evolving technologies, and changing customer needs, the IT outsourcing sector has massively grown and is continuing to progress. Here are the nine essential IT outsourcing trends to watch out for in 2023.

1. Recruiting Niche Developers

Developing a successful digital product requires exquisite experience and hands-on expertise in not just the development technologies but also in particular business niches and industries.

Simply stated, having experience in similar niches equips the developers with the critical skills and expertise required to seamlessly build a tech product. For this reason, more and more businesses nowadays prefer to outsource their project to developers and development agencies that have a portfolio of projects in their industry.

This not only ensures optimal quality of the end product but also eliminates chances of project hurdles and reduces the need for constant communication, aiding overall development efficiency.

2. Leveling-up Technology Choice

It is a commonly known fact that technology has witnessed tremendous growth and evolution in the last few years. Today, there are numerous high-end technologies in the market, like artificial intelligence, the Internet of Things, blockchain, augmented reality/virtual reality, and more.

Modern-day businesses prefer building digital products based on these technologies to rapidly gain customer favor and increase their chances of market success.

The latest trend among tech businesses is to choose development outsourcing agencies that hold expertise in these technologies and are capable of delivering solutions based on their integration. This way, tech businesses can add to their product’s value and align their offerings with the latest consumer demands for next-gen tech solutions.

3. On-site Model Adaption

Generally, the idea of outsourcing IT services is limited to hiring remote developers from a development outsourcing agency to work off-site. While it is true that this is a popular approach, let us tell you that you can also outsource your IT requirements and still have an in-house team working on your project.

The idea here is to deploy the outsourced development team to work on your office's premises by adapting to the on-site outsourcing approach. This approach is widely preferred by businesses that have complex projects and require constant communication with the development team working on the project.

To add to that, on-site IT outsourcing also enables businesses to practice more control over their product's development as they can easily scrutinize the development process and the developers. This factor aids optimal development efficiency and makes on-site outsourcing an excellent approach for tech businesses.

4. Coding Automation

2023 has proven to be an excellent year in terms of AI and ML growth; and has witnessed increased scope for AI-base automation. This factor has opened doors for automation in the development process, particularly in the programming stage.

Programming is undoubtedly one of the most complicated and time-consuming stages of the SDLC. As a result, more and more businesses are looking for ways to reduce the time it takes to code their solution.

The best solution in this aspect is to outsource your IT requirements to an agency that is capable of using AI-based software coding automation systems for the development process. These systems are capable of writing clean, precise, and neat codes for your program. This is in contrast to traditional development outsourcing practices, where the recruited developers have to manually write long lines of code for the project.

5. Transparent and Accountable Practices

Transparency and accountability are highly critical factors in digital product development and are paramount at present. This is especially the case with tech businesses outsourcing development to an external partner. This is because outsourcing often results in limited accountability and reduced transparency in the development process.

However, the latest trend in IT outsourcing is to follow project roadmaps and conduct development processes that nurture out-and-out transparency and accountability. One of the best ways to achieve this objective is to utilize modern project management tools and systems and conduct regular follow-up meetings to discuss the project's advancements.

Following these approaches will enable tech businesses to efficiently complete their product's development lifecycle with optimal efficiency.

6. Location-based Cost Optimization

Most businesses often choose to outsource their tech requirements to benefit in terms of capital investment and get a cost-efficient digital solution. However, businesses may or may not be able to achieve this objective in all cases. Broadly speaking, when it comes to capital investment in developing a digital product, a lot depends on the location you choose for outsourcing.

Earlier, businesses used to choose development outsourcing agencies based in their own countries for the sake of communication efficiency. Naturally, this option is not cost-efficient for businesses based in countries like the USA, Canada, the UK, etc.

The latest trend among businesses is to choose development agencies from locations like India, Ukraine, and Indonesia to optimize the overall cost of their project. This is because developers in these locations charge as low as $15/hr, as opposed to US-based developers, who usually charge $100/hr for software development.

What’s more? Development outsourcing agencies based in these locations not only offer budget-friendly solutions but also ensure communication efficiency by working in the outsourcer business’s time zone.

7. Flexible Development

Flexibility is essential to efficiently complete the development process in a limited time frame. Businesses chiefly choose to outsource their IT projects to impart out-and-out flexibility into the development process.

The latest trend is to leverage the flexibility of a development outsourcing company to build a scalable team that you can modify as per your requirements. Most businesses utilize this factor to upscale or downscale their teams at their discretion and resource availability for efficient and requirement-focused development.

8. Multi-sourcing Requirements

In many cases, businesses are unable to find a single outsourcing agency that caters to all of their requirements. Moreover, it is also possible that you wish to outsource a large-scale project but have limited time availability.

In these cases, businesses often resort to multi-sourcing. In this approach, a tech business can choose multiple vendors for their project and outsource different parts of their product to different vendors.

This way, you can stay assured of the product's quality and ensure that the team working on the project holds adequate expertise and skills for its optimal completion. This factor makes multi-sourcing one of the most prominent trends in IT outsourcing.

9. DevOps and Scrum Project Management

Efficient project management is a crucial factor for successful project development. This is even more important when it comes to IT outsourcing, as the better the project management is, the better the quality of the product will be.

For this very reason, more and more tech businesses hiring IT outsourcing agencies are going for next-gen project management approaches. Before hiring a development outsourcing agency, businesses ensure whether or not the prospective vendor follows Scrum-based development practices or holds experience in DevOps.

These are two of the most prominent and popular project management approaches that enable businesses to reduce the project's time-to-market, optimize code quality, and ensure requirement-focused development.

These were a few trends that are ruling the global IT outsourcing market at present. By following these trends, you will be able to align your digital product idea with best practices and industry standards, further boosting your business's success rate.

Summing It Up

IT outsourcing is a billion-dollar market with tremendous potential. However, in order to be able to leverage this potential, it is essential to be aware of the latest trends and practices in outsourcing IT requirements.

Through this blog, we are sure that you are aware of IT outsourcing trends and practices to watch out for in 2023. By keeping track of these trends, you will be able to fully harness the potential of IT outsourcing and can create a distinguished and exquisite tech product that stands out in the market.