2023 Software Outsourcing Trends Explained

July 10th 2023

Software development outsourcing has gained real traction in recent years, as businesses all over the world seek to improve the efficiency, speed, scalability and cost savings of their projects.

According to Avasant, 60% of businesses in the technology sector are now using outsourcing partners for at least part of their application development. This demonstrates the value of software outsourcing companies in helping organizations get quality software to market.

But in a business and tech landscape that’s constantly evolving, what does the long term future hold in the outsourcing market? In this blog, we’ll explore some of the key software outsourcing trends for 2023. From innovations like machine learning through new business models that the outsourcing industry is adopting.

The key software outsourcing trends to watch out for

It’s an exciting time to be a part of the software development outsourcing industry, as new innovations come on stream all the time. To keep you informed and help you understand just how outsourcing partners can help you, we’ve picked out the following software development outsourcing trends:

Artificial intelligence and Robotic Process Automation

These advanced technologies, along with machine learning, represent a revolution for the outsourcing market. Routine tasks that can be time-consuming, repetitive and prone to human error can be automated, therefore improving the consistency and speed of development, while also boosting the productivity of human developers. 

Implementing such advanced technology in-house remains beyond the reach of all but the most well-resourced business IT departments. This is where outsourcing companies are stepping in to open up this innovation to all. As a result, we expect AI and RPA to be major differentiators for outsourcing partners trying to stand out in the marketplace.

Read our guide on In-House vs. Outsourcing Software Development.

Agile practices and methodologies

Developing a good rapport and strong channels of communication is key for any good partnership between outsourcing companies and the businesses they support.

Working methodologies such as Agile and DevOps have emerged as key to building these relationships for the long term. They’re based around communication, collaboration and maximising efficiency, and are therefore aligned with the core goals of software development outsourcing, enabling software to be released faster and with a better reception from customers. For this reason, we expect adoption of DevOps and Agile within the outsourcing industry to continue growing.

Security and data protection 

The risk of cybercrime, and of sensitive data or intellectual property falling into the wrong hands has long been one of the biggest concerns around software development. The continuing growth in the size and sophistication of the cybercrime industry is only serving to push the issue even further into the spotlight.

Businesses taking up an outsourced service are understandably expecting greater information from providers around security and data privacy. Outsourcing partners are therefore taking greater steps to improve their security posture, and to demonstrate compliance with key regulations such as GDPR, CCPA and HIPAA.

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Hybrid outsourcing

There are many different ways to approach outsourcing, and an increasing number of businesses want the best of every option. They want the cost savings and access to skills of offshoring, while also having the cultural and language alignment that comes with onshoring or nearshoring.

The result of this is the emergence of hybrid outsourcing as one of the key outsourcing trends of 2023. Outsourcing partners offering hybrid models are giving their customers the ultimate in scalability and customization, which means that they can perfect the balance of cost and expertise without introducing unnecessary levels of risk.

Data science

The use of data science by businesses to drive insights will be one of the key outsourcing trends in 2023. The advanced nature of analytical tools mean that not every business can viably obtain the platforms and skills needed to do so in-house, which is why they’re turning to software development outsourcing to help them instead. 

Outsourcing partners that are able to offer data science expertise and capabilities will be better equipped to ensure that software development is aligned to wider business objectives.

Customer experience

This is one of the areas in which businesses are increasingly turning towards software development outsourcing. The reason for this is that, now more than ever, delivering best-in-class customer experience is a key differentiator between rival products in a saturated marketplace. When many applications offer the same functionality, it’s customer experience where the biggest influence can be made on buying decisions. 

As a result, outsourcing companies are ramping up and expanding their UX support to ensure their applications stand out from the crowd as much as possible.

Sustainability

The role that sustainability is playing in the business world is becoming more and more important by the day. Increasingly, businesses and the general public only want to support and partner with organizations that can demonstrate a meaningful sustainability commitment. 

The outsourcing industry is absolutely no exception to this. Outsourcing companies are currently adopting more environmentally friendly processes including lowering energy consumption, using renewable energy where possible, and reducing waste. Forward-thinking outsourcing partners have realized that this is an essential move in order to attract and retain clients.

Increasing global IT spend

The rise in IT investment due to increased digitization of customer and employee experiences is fuelling sustained growth in the software development outsourcing market, as IT teams struggle to accommodate the additional workload utilizing internal resources alone. This is where an outsourcing service will become invaluable.

Cloud services

The great march into the cloud is continuing at pace, and this is making a real difference in how an outsourcing service can be delivered. This is not only in terms of common access to platforms and data between both parties, but also because it eases the collaboration and communication process - resolving an issue commonly cited as a reason to shy away from outsourcing.

The ability to build software development teams for remote work quickly, easily and cost-effectively is helping remove many of the barriers in the way of outsourcing adoption.

Partnering with a software development outsourcing company

Deloitte’s research has found that 70% of companies that outsource their software development do so primarily to save money. But as this blog demonstrates, there is much more to it than cost savings - as long as you choose the right outsourcing partners.

ciklum_blog_outsourcing_trends_image_02A good outsourcing company will be fully aware of all of the outsourcing trends of 2023 listed above. They will be constantly adjusting their business model and offerings so that you can get exactly the service, expertise and support you need, at exactly the time you need it, and at a price point that makes sense.

Furthermore, their expertise means that they will be ideally placed to advise on which of the above innovations will be best suited to your organisation’s specific characteristics, industry and use cases. Instead of simply throwing all kinds of technologies at your app development, they will work to understand what you need and select the right technology to fulfil those needs.

And it’s that philosophy that drives the comprehensive software development outsourcing service that we provide at Ciklum. Our workforce of more than 4000 is located all over the world, comprising some of the very best data engineers, scientists, consultants, architects, developers and much more. They’re on the pulse of everything that’s happening in the outsourcing market, understanding what businesses like yours need, and working hard to deliver development services that meet your expectations.

Partnering with us means you’re working with a Niche Player in the Gartner Magic Quadrant for Custom Software Development Services. But perhaps even more importantly, it means you’re working with an outsourcing partner that develops based on understanding. Get in touch with our team today to discuss your next app development project and how we can help.

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