Software Development Outsourcing Trends

The software development outsourcing industry is constantly evolving, with new trends and techniques emerging. Of course with new trends come challenges plus opportunities and if you're planning to outsource your software development in the near future, it's important to stay up-to-date on the trends. 

We've put together a list of the top software development outsourcing trends to watch. Keep reading to learn more! 

Software development outsourcing trends

What is software development outsourcing? Software development outsourcing is the process of contracting out the development of software applications to another company or individual. Outsourcing development can be done for a variety of reasons, including saving on labor or operation costs, getting access to specialized skills or speeding up the development process.

The practice has become increasingly mainstream in recent years, and is expected to continue to grow in popularity over the coming years.

Here are the key trends that are shaping this industry:

1. Increasing demand for outsourced developers

It's no surprise that this is the trend topping this list. Understandably so because the winds of change sweeping across the software development outsourcing field are certainly informed by the undeniable fact that there is enormous demand for these services.

More companies are finding it convenient to outsource their software development needs, and the COVID-19 pandemic intensified this demand even further. But even as the pandemic seemed to accelerate or even force some companies to look more into outsourcing, the rise in demand was always going to hold steady due to a number of factors, including the following:

  • The increasing complexity of software applications.

  • The growing demand for mobile apps and cloud-based solutions.

  • The shortage of qualified software developers in many countries.

  • The high cost of in-house software development vs outsourced development.

  • The need to speed up the deployment of new software applications.

  • The globalization of business operations. 

  • The need for staff augmentation whenever the in-house team is at capacity. 

2. More demand for specialist software developers

An interesting shift in software outsourcing trends is that businesses are now looking for specialist software developers or vendors, as opposed to generalists. They want to work with outsourcing providers that have an in-depth understanding of a specific domain, and who can provide them with tailored solutions. 

This is particularly true in the case of enterprise-level businesses worldwide, who are often looking for custom software development services. Specialization is key, and it's something that companies will increasingly consider when thinking of outsourcing. 

3. Shortage of skilled software developers

There's a looming shortage of skilled software developers that companies will need to address in the coming years. The U.S alone was already suffering a shortfall of over 1 million software developers by the end of 2020 per the U.S Labor Statistics.

This is putting pressure on companies to outsource as they look for alternative ways to get their projects completed on time and within budget. 

4. Greater use of platforms and ecosystems

Platforms and ecosystems are powering software development outsourcing in ways never imagined before. Now companies need not struggle to find the right talent from any part of the world, as there are already platforms full of high quality developers where functions such as payroll and HR are professionally integrated.

Ecosystems on the other hand bring a connected pool of developers that companies can tap into and get complex work done faster than even in-house.

5. Emergence of new outsourcing destinations

While the United States will continue to be a top software outsourcing hub, new destinations are emerging in eastern and central Europe. Countries like Hungary, Romania and Bulgaria are quickly becoming popular destinations for IT services.

These hubs now offer talented developers at a fraction of the cost of their counterparts in the United States or Western Europe, and with the growth of the internet and globalization, it's easier than ever to work with teams located overseas. So if you're looking for a cost-effective way to outsource your software development, keep an eye on these new hubs in the years to come!

6. Influence of emerging technologies

As outsourcing finds its rightful place in the ever dynamic global software development ecosystem, a key challenge beckons: The industry is faced with the urgent need to equally accommodate the fast growing tech environment that features disruptive technologies that are billed to power the next phase of innovations. We are talking Blockchain, Cybersecurity, Cloud Computing, Artificial Intelligence, etc.

Here are the trends in this category;

Increasing demand for Blockchain Services

As businesses strive for increased efficiency and security, the demand for services driven by blockchain technology is on the rise. Blockchain is a distributed ledger technology that allows businesses to conduct secure transactions without the need for a third party. This makes it an ideal solution for businesses that need to streamline their operations while ensuring the security of their data.

As the popularity of blockchain continues to grow, we can expect to see an increase in demand for outsourced blockchain services from both small and large businesses.

Growing need for Cybersecurity

One of the top software development outsourcing trends is the growing need for Cybersecurity. The growth of internet-connected devices and the ever-growing amount of data have made Cybersecurity a top priority for businesses. In order to protect their data and networks, businesses are increasingly turning to outside experts for help. This has led to a growth in the cybersecurity outsourcing market.

Increasing cloud computing market

The cloud computing market is only going to continue to grow in the years to come as data storage becomes central. With more and more businesses moving their operations online, the need for cloud-based technology and services will only continue to increase.

This is great news for software development outsourcing firms, as it means there will be more work available for them. As this trend continues, we can expect to see even more innovative and efficient cloud technology solutions being developed by outsourcing firms.

Growth of AR and VR markets

The impact of augmented reality (AR) and virtual reality (VR) is being felt across all industries, and the software outsourcing sector is no exception. As both AR and VR technologies continue to evolve, the demand for software that can support them will only grow. This presents a huge opportunity for development teams that are able to proficiently work with these new technologies.

What is the future of outsourcing software development?

The software outsourcing industry is on the rise and is only going to continue to grow in popularity. There are many reasons for this, but chief among them is the sheer cost savings that can be realized.

Not only is it more cost-effective to outsource software development, but the quality of work that can be achieved can equally be superior as companies get the chance to work with the very best from around the world, regardless of where the talent is located.

With the right talent, you can rest assured that your project will be handled expertly and with the utmost attention to detail. As technology advances, so too does the field of software development outsourcing.

Conclusion

In spite of the current political and economic uncertainties around the world, the software development outsourcing industry continues to show strong growth. Of course nothing good is ever devoid of weaknesses and software development outsourcing cons do exist, they are negligible compared to the pros. This explains why the demand is increasing, with exciting trends and opportunities emerging in the market all the time.

Businesses are finally realizing the many benefits of outsourcing, such as increased efficiency and cost savings.

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