Outsourcing software development has become an integral part of the tech industry, allowing companies to harness global talent and expertise. As we delve into 2023, the popularity of outsourcing software development continues to rise, transforming the way businesses operate and innovate.
In this guide, you'll know the top 11 outsourcing software development trends that are set to shape the market in the year. From remote teams to custom software engineering, these trends will influence how companies make decisions in changing business environments.
Top 11 Outsourcing Software Trends to Look For in 2023
In 2023, the software outsourcing trends are poised for significant transformations. These trends aren't just speculation; they are backed by solid statistics and data.
Remote and distributed teams
In a post-pandemic world, remote work has become the new normal. According to a FlexJobs survey, a leading hiring platform, over 94% of companies reported positive or excellent results from remote work arrangements. This success has led to a surge in the adoption of remote and distributed teams. The convenience and efficiency of remote work have prompted businesses to expand their outsourcing endeavors to include talent from around the globe. The software outsourcing trends of collaborating remotely is expected to flourish further.
Outsourcing to enhance cybersecurity
Expenditure on products and services related to information security and risk management is anticipated to experience a robust growth of 11.3%, surpassing $188.3 billion in 2023, as Gartner, a prominent research and advisory firm, claims. Outsourcing cybersecurity can provide access to specialized expertise, leading to better protection. With the increasing frequency and sophistication of cyberattacks, companies are recognizing the value of outsourcing to experts who can fortify their digital defenses. As a result, cybersecurity-focused outsourcing is on the rise.
Custom software development
Custom solutions allow companies to align software precisely with their unique needs and strategies. Custom software development is set to become even more prevalent as companies seek tailor-made solutions that can give them a distinct advantage in the market. The global custom software development market size was valued at USD 29.29 billion in 2022 and is expected to expand at a CAGR of 22.4% from 2023 to 2030, according to GrandViewResearch, a market research and consulting company.
Increase in the use of IoT devices
Due to Statista’s report, by 2023, it is projected that the number of IoT devices will exceed 30 billion. This rapid proliferation of IoT devices necessitates the development of software to manage and analyze the data they generate. Software outsourcing trends for IoT applications will see a significant uptick as organizations strive to capitalize on the opportunities presented by the Internet of Things.
The global number of IoT devices. Source: Statista
Use of Robotic Process Automation (RPA) and AI
According to Deloitte known for its comprehensive research, industry insights, and thought leadership, companies that have adopted intelligent automation see an average cost reduction of 32%, up from 24%. The augmentation of RPA with AI technologies further expands the scope of automation, making it a prominent trend in outsourcing. By integrating AI capabilities such as machine learning and natural language processing, organizations can achieve even greater levels of process automation and intelligent decision-making. This convergence is not only streamlining operations but also enabling businesses to extract valuable insights from data, enhance customer experiences, and drive innovation.
Agile practices focus
Agile methodologies have become a cornerstone of modern software development outsourcing trends. More and more companies benefit from the Agile methodology, while its projects have a higher success rate, improved time-to-market, and enhanced team collaboration when using such practices. This continued success is driving companies to prioritize Agile outsourcing. Agile practices to remain at the forefront of software development outsourcing. Agile allows for flexibility and faster response to changing requirements, making it an invaluable approach for delivering high-quality software.
Cross-platform and mobile development
The mobile app market shows no signs of slowing down. More and more companies should prioritize mobile app development to reach a wider audience. This trend highlights the growing need for outsourcing expertise in cross-platform and mobile development. Companies will increasingly turn to outsourcing partners to navigate the complexities of developing apps that work seamlessly across multiple platforms and devices. Avasant, a global management consulting firm, found that 60% of global companies outsource app development for better digital presence and customer journey flexibility.
For more than 11 years now, we, at Cleveroad, have been providing IT outsourcing services for business across the globe in multiple domains: Logistics, Healthcare, FinTech, Retail, Education, etc. Our extensive spectrum of IT services encompasses everything from custom software development, mobile app development, web development, and UI/UX design to cutting-edge technologies like Blockchain, AI, Telemedicine, Supply Chain, and IoT solutions.
To prove our competence, let us acquaint you with one of our successful projects for a UK-based company.
Jamie Hartley, CEO & Founder at Crossfader. Feedback about cooperation with Cleveroad
Boost in demand for Big Data analytics services
Big data analytics is on the rise, with 72% of companies considering it a priority, according to PolyVista, a data analytics and business intelligence company. The ability to leverage data for informed decision-making is driving the demand for outsourcing data analytics services. Outsourcing firms specializing in data analysis will see heightened demand as companies seek to extract valuable insights from their ever-expanding datasets.
A significant shift is occurring from cost-centric outsourcing to a focus on expertise. Companies recognize that the value of outsourcing lies not only in cost savings but in the ability to tap into specialized skills and knowledge. As a result of cooperation, Pesti.io, the world's best publicist and marketing agency claims that 78% of businesses worldwide feel optimistic about their partners.
Centering on quality and UX Design
User experience (UX) and software quality have become critical success factors, and software development outsourcing trends. An astonishing 88% of online consumers are less likely to return to a site after a bad experience, according to Econsultancy. This trend is driving an increased focus on outsourcing for UX design and quality assurance. The outsourcing landscape will feature a growing emphasis on delivering products and solutions that not only function well but also offer exceptional user experiences.
Value of ethical standards
More than half of the US consumers consider ethical considerations important when choosing products and services, and stop buying products considered unethical, according to Mintel, a global market research and market intelligence firm. Companies are recognizing the significance of ethical standards in both their own operations and those of their outsourcing partners. As ethical concerns continue to shape consumer preferences, organizations are placing greater emphasis on adhering to ethical standards and encouraging their outsourcing partners to do the same.
The software development outsourcing trends for 2023 are firmly grounded in data and market dynamics. These trends reflect the evolving needs of businesses as they seek to leverage outsourcing as a strategic tool for achieving their goals. By embracing these trends, companies can position themselves for success in a competitive and rapidly changing technological landscape.
Why Do Businesses Across Industries Decide to Outsource Software Development?
Let's delve into the core reasons behind the widespread adoption of software development outsourcing.
Cost reduction remains one of the primary drivers for outsourcing software development. Outsourcing allows businesses to tap into a global talent pool, often at a lower cost compared to hiring and maintaining in-house teams. This financial advantage is especially critical for startups and small to medium-sized enterprises (SMEs) with limited budgets.
Access to global talent
A Gartner study determined that 82% of business leaders intend to maintain some degree of remote work for their employees in the future. By outsourcing, companies can collaborate with skilled professionals worldwide, bringing diverse expertise and fresh perspectives to their projects. This access to global talent fosters innovation and helps businesses stay competitive in a dynamic market.
Recently, we've delivered a mobile banking platform for our client, a UK-based FinTech company that provides open-banking payment services to both B2B and B2C sectors. Their in-house resources and skills weren't enough to build such a solution, so the company decided to outsource the product development to a 3rd-party provider who could take over all stages of a software development cycle.
Our software engineers created a mobile banking application using Flutter, which includes a loyalty program. Whenever users make transactions within the company's financial platform, they receive points equivalent to one point for every £1 spent. These accumulated points can then be exchanged for a variety of items, including Uber or Amazon vouchers, premium products like Apple AirPods, and even vacation packages.
Here’s the review our client left Clutch about their successful cooperation experience with the Cleveroad team.
Focus on core competencies
By entrusting specialized tasks like software development to external experts, businesses can tap into a vast pool of talent and experience. This not only accelerates project timelines but also often results in higher-quality outcomes, further strengthening their competitive advantage in the market. In essence, outsourcing non-core activities empowers companies to innovate, expand, and thrive in a rapidly evolving market.
Speed to market is crucial in the fast-paced tech industry.Outsourcing partners often have specialized expertise and resources readily available, allowing businesses to expedite product development and launch. This agility is especially valuable when competing in rapidly evolving markets.
Mitigating risks is a priority for many businesses engaged in outsourcing software development. Outsourcing software development trends spreads risks across multiple parties, reducing the burden on a single organization. Additionally, outsourcing firms often have established risk management protocols in place, helping businesses navigate potential challenges effectively.
Scalability and flexibility
Scalability and flexibility are cited as key reasons for outsourcing by a prevalent number of companies. Outsourcing arrangements allow businesses to scale their development teams up or down based on project requirements. This adaptability ensures that resources are allocated optimally, reducing wasted capacity and costs.
Access to advanced technologies
A significant number of businesses consider gaining access to advanced technologies as a compelling reason for outsourcing software development trends. Outsourcing partners often invest in cutting-edge technologies and tools, enabling their clients to benefit from the latest innovations without the need for substantial upfront investments.
Round the clock software development cycle
Companies appreciate the 24/7 software development cycle made possible through outsourcing. Global outsourcing allows for round-the-clock work on projects as teams in different time zones can hand off tasks seamlessly. This continuous development cycle expedites project delivery and issue resolution.
Businesses across industries adopt software development outsourcing for various compelling reasons. Companies demonstrate that outsourcing is not just a cost-saving measure but a strategic approach to enhance competitiveness, innovation, and efficiency in a rapidly evolving tech landscape.
Outsourcing objectives and strategies. Source: Deloitte
Recommendations for Business Owners Considering Software Development Outsourcing
If you're a business owner thinking of outsourcing your product building to a 3rd-party IT provider, , it's essential to approach this strategic decision with careful consideration. Here are some key recommendations to introduce outsourcing software development trends to your business.
Define clear objectives and scope
Before diving into outsourcing, define your project's objectives, scope, and expected outcomes. Clearly articulate your goals and requirements, including technical specifications and deadlines. A well-defined project scope serves as a foundation for effective collaboration with your outsourcing partner.
Finding a reliable IT partner
When looking for a reliable IT outsourcing partner, it is advisable to start with a thorough market research. Pay attention to the company's experience and reputation, and consider customer testimonials. It is also important to assess how the potential partner can support your specific needs and business goals. Put an emphasis on communication and engagement to ensure transparency and understanding during the collaboration. Finally, don't forget to ensure alignment on data security and legal aspects to protect your interests and ensure standards are met within time and budget.
Assess vendor’s expertise and experience
Evaluate potential partners based on their expertise in your industry and the specific technologies required for your project. Ask for case studies or references that demonstrate their ability to deliver similar solutions and expertise in outsourcing software development.
Cleveroad has been providing high-quality tech services since 2011, and our experience spans many different domains. We have successfully partnered with clients from a variety of industries including healthcare, finance, e-commerce, education, and more. Our diverse project portfolio emphasizes our ability to adapt to different industries and provide solutions that meet clients' needs and goals.
Consider reputation and reviews
Research the outsourcing company's reputation and read client reviews and testimonials. A positive track record and strong client feedback are indicative of reliability and competence. You can get acquainted with the opinions of our clients by following our Clutch profile.
Communication and cultural fit
Effective communication and cultural fit are essential, and are one of outsourcing software development trends. Ensure that your outsourcing partner can maintain open and transparent communication throughout the project. Also, assess cultural compatibility to minimize misunderstandings.
Data security and compliance
Verify that the outsourcing partner follows industry-standard security practices and complies with data protection regulations, especially if handling sensitive data. Ensure that robust data protection and security measures are in place throughout the project. Discuss confidentiality agreements and data handling procedures with your outsourcing partner to safeguard sensitive information. At Cleveroad, we traditionally implement security measures like data encryption, access-based control, and ensure compliance with industry regulations.
Consider the partner's ability to scale resources up or down to meet your project's changing demands. Scalability ensures flexibility and cost-efficiency, and enables you to make sure that you can introduce dynamic changes in your project, which is crucial to stay relevant.
Set clear expectations and contracts
Establish a detailed Service Level Agreement (SLA) and contractual terms that clearly outline project milestones, deliverables, timelines, and payment structures. Clarity in expectations helps prevent misunderstandings and disputes during the project.
Regular monitoring and reporting
Implement a monitoring and reporting system to track the project's progress. Regular updates and status reports from your outsourcing partner allow you to stay informed and make timely decisions. To ensure the full transparency, we conduct regular calls with clients, sprint reviews, demo-calls, and form delivery reports.
Embrace Agile methodologies
Adopt Agile methodologies for project management, as they offer flexibility, transparency, and the ability to adapt to changing requirements. Agile practices enhance collaboration and communication between your team and the outsourcing partner. We at Cleveroad stick to Agile methodologies, namely Scrum, providing benefits by promoting collaboration, adaptability, and transparency, allowing teams to deliver high-quality products efficiently.
Foster a collaborative relationship
View your outsourcing partner as an extension of your team rather than a separate entity. Encourage collaboration, knowledge sharing, and mutual learning to maximize the partnership's potential.
By following these recommendations, you can navigate the outsourcing landscape with confidence and maximize the benefits of collaborating with external software development experts. The key lies in meticulous planning, effective communication, and a strategic approach to selecting and managing your outsourcing partner.
Your Reliable Vendor for Outsourcing Software Development
Cleveroad is a reliable outsourcing software development company located in the CEE region, Estonia. Since 2011, we’ve been helping startups, small and medium-sized organizations, and enterprises to deliver tailored digital solutions to meet unique business needs within a diversity of domains.
By cooperating with us, you’ll receive the following benefits:
- Multi-domain expertise. Our team comprises qualified professionals with a proven experience in software development for the most demanded domains (Healthcare, FinTech, Logistics, E-commerce, E-learning, and more,) delivering top-notch results
- Cost-efficiency. We deliver the highest value for money rate to make our cooperation maximum beneficial for you, and offer flexible cooperation models to suit your requirements: dedicated development team, time and material,team augmentation
- Timely delivery. With Cleveroad Agile-oriented experts, you have a guarantee that the project milestones are met
- Custom software development services. We develop bespoke solutions that are fully tailored to your specific requirements, ensuring they align perfectly with your vision
- Initial project estimate cost from our experts. No hidden costs or additional commissions
- Consulting from our domain experts on your project. From business and market analysis to implementation of the solution and its introduction into your business environment
- Quality Assurance. Meticulous testing and quality checks delivered by our certified QA engineers guarantee the reliability and functionality of your future software
- Dedicated support. We deliver ongoing support and maintenance to ensure your software performance is smooth post-launch
Our tech professionals have delivered many outsourcing projects, so you can prove our experience by checking our case studies:
- Video streaming platform
- Transport Management System with route planning
- Clinic Management System for rehab services provider
- Micro-investment platform for the Middle East market
- Video-on-demand platform for NFT artists, fans, and buyers
- A software system for organizing and managing sports activities
Partner with a reliable outsourcing vendor
Delegate your software development processes to a qualified IT company with 11+ years of experience in outsourcing software development
In 2023, the trends in software development outsourcing include:
- Focus on remote and distributed teams
- Cybersecurity enhancement
- Custom software development
- IoT device integration
- RPA and AI adoption
- Agile practices
- Cross-platform and mobile development
- Big data analytics services
- Skill-based outsourcing
- Quality and UX design
- Emphasis on ethical standards
These trends are supported by statistical data and market dynamics.
Yes, outsourcing software development can be a smart strategy. It allows businesses to access global talent, reduce costs, speed up development, mitigate risks, and focus on core competencies. However, the success of outsourcing depends on careful partner selection, clear communication, and well-defined objectives.
Yes, outsourcing continues to be a growing trend. Companies across industries are increasingly turning to outsourcing for various reasons, including cost efficiency, access to specialized skills, and flexibility. The statistics and market data indicate a sustained upward trajectory in outsourcing practices.
According to MarketSplash, the revenue from outsourcing software development is projected to reach a substantial $122.7 billion by the end of 2023. This figure highlights the significant size and continued growth of the outsourcing software development market, making it a substantial and influential segment of the global technology industry.
Evgeniy Altynpara is a CTO and member of the Forbes Councils’ community of tech professionals. He is an expert in software development and technological entrepreneurship and has 10+years of experience in digital transformation consulting in Healthcare, FinTech, Supply Chain and Logistics
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