Outsourcing can encompass on-shore, off-shore, and near-shore outsourcing. The popularity of outsourcing software development is now considered the norm, however, it’s a long way from being fixed. It is estimated that the industry grew by 5.84% from 2015 to 2019. We are going to look into some of the trends that occur in the outsourcing market in Europe.
Drivers of the market
There is no denying the effect that new digital technology has had on the IT industry. The speed of its development has made many companies realize that new digital technologies are a way of improving their business productivity and the service that is provided to their customers.
Originally, the market was driven by short-term goals such as reducing costs and improving efficiency. This has now changed as the countries that began creating low-cost software development have since increased wages. Companies today are looking for more than the workforce alone. Expectations regarding experience, skill sets, and innovative ideas in software development.
Trends that shape the outsourcing industry
- According to predictions made by Gartner, every industry will have completely changed by 2025 thanks to the digital business. As the demand for digitalization increases. so does the creation of new technology. Business opportunities and drivers include:
- New environments with new vulnerabilities. Security will play a role in outsourcing strategies and we will see more companies choosing expert security vendors with Security-as-a-Service abilities.
- Businesses will gain from their experiences in outsourcing. They will be able to make more educated decisions on outsourcing or insourcing
- Strong adoption of cloud or other services that allow outsourcing to become a more substantial process
- More andmore new technologies being used will create greater challenges withintegration. If a company is not able to manage multiple platforms, they willneed to use outsourcing services.
- So far, we have seen a fixed price model in outsourcing. This is likely to change to a quality-centered model with companies building long-term partnerships and dedicated teams
- The joining and reinforcing of mobility, IoT and Smart devices. Mobile apps are continuously pushing the development of mobiles and even the purchasing of apps
- Specific businesses will require specific versions of technologies, each version being faster than the previous. There are certain industries that are growing at an incredible speed and require domain-specific technologies, for example, personal wellness records, mobile banking authentication, and biometric green money
- Eastern Europe is becoming the go-to area or software outsourcing. It’s cost-effective with excellent rates, but also provides a level of quality that is outstanding. Its location and cultural similarities are advantageous for both Western Europeans and Americans
- Offshore software development is seriously growing in Finland, Spain, the UK, and Germany. Denmark, the Netherlands, Norway, and Sweden are other European counties that are making the most of the advantages of outsourcing software development
Of the countries mentioned above, between 59% and 87% of the software development is onshore, from 9% to 26% is nearshore, and 3% to 16% is offshore. Statistics show that the Spanish are still more inclined to work with onshore companies, while the Danish will outsource nearshore and offshore more than their fellow Europeans.
With regards to industries, automotive, telecommunications, a software startup, consumer products, banking, and oil and energy have the highest percentages of outsourced software development.
It’s impossible to ignore the effect the development of software is having across the globe. As technology advances, we are changing the way we view outsourcing. Software developers do not just need to be knowledgable nowadays they need to be experts in order to keep up with those businesses who are requiring new trends such as AI and robotics.
The locations available to us for outsourcing have also grown. We have many more options and it doesn’t just boil down to which country, or even continent has the cheapest rates. Regardless of the industry, you are in, there will be an outsourcing company that will be able to handle the exact needs of your business.