Software Development Outsourcing Trends to Watch Out for in 2023
Sourcing Top Specialist Talent
In 2023, there’s a strong chance that attention for outsourcing services will be turned towards locating niche talent - the people who can do jobs that few others can.
When specialist talent is in short supply in your area, your options are limited. Yet when the global talent pool opens up to you, it makes sense to explore the abundance of niche talent located around the world.
Why the need for more specialist talent?
Because as technology continues to advance, with AI taking great strides and the world taking notice in the latter stages of 2022, there’s likely to be an uptick in tech-focused outsourcing. With the right working from home monitoring software you can hire talented overseas workers and get concrete data regarding their productivity levels.
Maintaining Business Continuity
Companies preferred outsourcing with multiple vendors before the pandemic. But now, most want a strategic partnership with one (or fewer) vendors,
Business continuity is all about maintaining relationships with the same companies, suppliers, and service providers. The advantage of doing this is knowing exactly what to expect, and minimizing the amount of change within your organization.
When you constantly switch up your business working arrangements, you risk losing productivity and make it much harder to predict productivity and other metrics you need to succeed.
How?
- Frequently changing service providers can disrupt business continuity.
- And a company is more likely to build a strong relationship with its outsourcing company when it’s working with the same team for an extended period. A strong bond can increase commitment and trust, which makes reaching objectives easier.
- Additionally, businesses can ensure continuity with an outsourcing partner through a more extended outsourcing contract.
In 2023, many businesses will focus their efforts on cultivating strong working relationships with a few outsourcing companies in favor of the constant churn and unpredictability of juggling new partnerships.
Especially in light of the turmoil of the past few years in business, with pandemics and growing talks of recession, it’s worth having business partners you can trust in the long term.
The Need for Advanced Technology
As technology continues to advance at breakneck speed, it’s likely that in 2023 there’ll be a trend toward less traditional outsourcing services.
For example, machine learning and automation could play a huge role in the coming years as companies look to grow smarter and more efficient with the assistance of technology. Cloud computing is another area many companies will look to for managing the heavy burden of storing and accessing online data and resources.
Here are the most current and trending technologies used in the outsourcing industry:
Robotic Process Automation (RPA) solutions
RPA is software development that helps build, deploy, and manage robots to carry out simple tasks.
The demand for robotic process automation is increasing as companies realize it is more cost effective to use robots to perform repetitive tasks.
A 2022 Grand View Research report states that the RPA market size was worth $1.89 billion in 2021.
This market will expand at a compound annual growth rate (CAGR) of 38.2% from 2022 to 2030.
Artificial intelligence, machine learning, and automation
Business and outsourcing companies use Artificial Intelligence to automate repetitive tasks, calculations, or replying to messages.
Additionally, Artificial Intelligence helps a provider improve customer service. Chatbots or cloud-based IVR (Interactive Voice Response) are examples of this revolutionary, emerging technology.
Cloud computing
Cloud outsourcing is essential to access other modern technologies like AI, RPA, and machine learning. It also empowers a company to collect and store resources on the cloud and access cloud services.
Companies such as Amazon Web Services (AWS), Google, and Microsoft are investing more capital into their cloud platform and cloud services.
Blockchain is Going Mainstream
Blockchain technology is not just for Bitcoin and other cryptocurrencies. It is a form of distributed ledger technology with the potential to transform industries, including finance and healthcare.
The most common implementation involves a network of computers working together to create what’s called a blockchain—the framework by which all transactions are recorded.
Any changes made within the Blockchain are verified and propagated through the entire system so that every computer has an identical copy of the Blockchain at any given time.
This way, Blockchain is changing the way industries work by removing intermediaries, establishing trust, and decentralizing control. This is how it will affect software development in the next five years.
- First, Blockchain will change the way we develop secure applications.
- Second, it will influence our ability to verify data integrity.
- Thirdly, smart contracts will be a more common part of software development.
- Fourthly, Blockchain will bring transparency and accountability into the supply chain process that has always been difficult to trace with current technology.
- Fifth, it will help with the Internet of Things (IoT) implementation by reducing the need for third-party validation of device information.
- Sixth, Blockchain will allow for anonymous data transactions, which could help patients get treatment without identity verification or documentation.
- Seventh, there will be less customer payment fraud because cryptocurrencies like Bitcoin use Blockchain to prevent double-spending.
A Focus on business flexibility and adaptability
The Covid pandemic and the resulting lockdowns were chaotic and disruptive. Many countries had a hard time recovering from the short term economic shock.
Flexibility is a trait that a lot of companies are already prioritizing - more and more businesses place heavy emphasis on agile processes and the need to be adaptable to navigate and overcome ever-changing obstacles.
2023 will mark a further honing in on this focus on flexibility, as many businesses are now starting to consider alternate work models such as the 4-day workweek.
As a result, it could be that there are gaps to fill, services to maintain, and customers to be served when teams spend more time OOO. It could also be the case that companies look to mitigate against disaster by outsourcing and refining their collaboration infrastructure and general workflows.
Surveillance software can be a useful aid for building a flexibility-first work dynamic, as you can onboard new hires with different hours while tracking productivity and output.
Outsourcing surge amongst startups and small businesses
Outsourcing allows small businesses or startups to access the best talents and tools at economical prices.
These businesses outsource repetitive tasks to save time and money. Small companies are also less likely to have experienced employees due to their limited payroll budget, and outsourcing enables them to access the best talents.
According to a Clutch survey, 90% of small US businesses plan to outsource a business process in 2022, a 10% increase from 2021.
This outsourcing trend will continue in 2023 and disrupt various industries.
Preferring remote work
Due to the Covid pandemic, remote work has become the new norm.
According to a 2022 study on remote work by SCIKEY, 82% of respondents prefer working from home.
The study further revealed that 64% of employees said that they are more productive working from home and feel less stressed.
From increasing their competitiveness by lowering labor costs, and reducing time-to-market, to improving quality and innovation – it’s no wonder this trend is expected to grow.
Companies are continuing to hire remote developers for their software development needs because they want the best talent with the most up-to-date knowledge while avoiding the high costs associated with hiring new employees.
This trend is set to continue in 2023 and beyond.
IT outsourcing to Eastern Europe and SouthEast Asia
Although India and China dominate the IT outsourcing industry, many tech businesses today are outsourcing tasks to Eastern Europe and SouthEast Asia. Companies in North America like the United States prefer East European countries (Romania, Ukraine, Poland...) and SouthEast Asia countries (Vietnam, Philippines, Indonesia...), for IT outsourcing due to their proficiency in English, cultural similarity and low cost. These regions have a high percentage of skilled people (including tech professionals), affordable talent, and strong data security.
Before the pandemic, companies were moving from cost reduction to prioritizing quality and scalability but that changed with the pandemic.
Deloitte’s Global Survey 2021 stated that 88% of the surveyed companies said cost reduction was now their main outsourcing objective.
Most surveyed outsourcing companies said that although clients wanted agility, scalability, and technology enablement, the reduction of operational costs brought by outsourcing services was the primary decision making factor.
This trend could continue in 2023 while the world economy recovers from the pandemic and recessions.
