How are Software Development Outsourcing Trends Evolving?

Quynh Pham

Quynh Pham | 24/06/2024

How are Software Development Outsourcing Trends Evolving?

What are some of the top software development outsourcing trends? Why do you need to stay informed on this topic? Are trends constantly evolving, or are there some recurring themes in software development outsourcing that you need to look for?

This article reveals the answer to all these questions, uncovering a bigger picture of software outsourcing. Software outsourcing is a massive industry with remarkable growth that has overtaken the world. Precedence Research estimates that the global market size for IT services outsourcing, which was valued at USD 530.15 billion in 2021, will reach around USD 1.06 trillion by 2030, expanding at a compound annual growth rate (CAGR) of 8.06% between 2022 and 2030.

Here are all the outsourcing trends that businesses and developers need to know to stay in the loop of the global outsourcing market.

Key Takeaways:

  • Software development outsourcing is a key to innovation and success for every business, partly because finding the talents with the right domain expertise is challenging.
  • Hybrid work models, Agile and DevOps methodologies, specialized and quality talent, cloud technology, AI and ML, sustainable development, data science, and strong cyber security are some of the top 2024 software development outsourcing trends.
  • There have been recurring patterns in the top outsourcing trends over the past few years.

Why Care About Software Outsourcing Trends?

Why Care About Software Outsourcing Trends?

Although the number of developers worldwide is predicted to rise by 3.2 million from 2020 to 28.7 million by 2024, businesses still face the challenge of accessing the talent pool with the right specialized experts. There are multiple factors contributing to this fact.

  • Fierce competition: The software industry is competitive. Attracting the right skills is often challenging and can even be elusive. It doesn’t help, as 30% of new hires leave within the first 90 days. Additionally, 36% of HR leaders claim that they lack the funding necessary to attract top talent.
  • Prospective employees are constantly searching for workplaces that provide growth and development opportunities, but companies may find it challenging to promote these qualities.
  • There is no question that technology is developing in leaps and bounds. Tech professionals need to update their skills to keep up with the change. The upskilling of an in-house team often takes too long and costs too much. However, the rapid growth causes a mismatch between the skills of potential hires and the skills employers are looking for.

Solving these employment and funding problems can take a long time and even more time. Why not free up your time and energy to focus on strategic and core business activities? Start with a strategic outsourcing plan to choose the right and trustworthy outsourcing partner, like Orient Software. If you are new to outsourcing software development, another approach you can take is to understand the latest outsourcing trends and work out your plans from there.

Software Development Outsourcing Trends in 2024

Software Development Outsourcing Trends in 2024

Technology is constantly developing, but that doesn’t mean completely new technology is introduced every year. Some trends persist and continue to grow in the coming years. For more insights, check out our articles on outsourcing trends in 2023.

Hybrid Work Model

A report showed that 75% of companies intend to cut back on office space in 2019. This represents a rough 30% increase from 2022. Forbes reported that 77% of employees said they would take a job without going to an actual workplace. These numbers show that remote work and hybrid work are here to stay.

This work model involves elements of offshore, nearshore, and onshore approaches. Most software outsourcing companies themselves also embrace working remotely or having set remote working days, as this enables them to tap into the global talent pool while saving costs on in-house-related office supplies. Technology has enabled easy and smooth connections between people in different locations while delivering high-quality work. Remote software development teams are the future that companies need to be open and ready to embrace.

Agile and DevOps Methodologies

Agile and DevOps Methodologies

Agile methodologies have been the top development methodology for a while. This method, just as its name suggests, offers myriad benefits, including space for flexibility and rapid development cycles while also addressing the limitations of traditional methodologies.

On the other hand, DevOps focuses on continuous delivery, automation, and integration. Although these are two completely different approaches to software development, the Agile methodology and DevOps methodology actually complement each other and significantly enhance the overall development process.

Demand for Specialized Talent

With the booming of Artificial Intelligence (AI), Machine learning (ML) and Robotic process automation (RPA), businesses have found it harder and harder to secure developers with these specialized skills. If businesses were to rely on in-house teams, it is going to take a long time for team members to master related skills. Hence, the most immediate and cost-effective solution is reaching out to outsourcing partners.

The outsourcing industry is known for having access to a credible talent pool. All your worries regarding upskilling the in-house team, settling for a developer with less skill set, or spending months searching for the right talent are gone. Not only does having the team with the right set of skills on board speed up the project significantly, but your team also has more time to focus on value-driven activities, e.g., thoroughly understanding the market’s demand.

Multiple Outsourcing Partners

We have been discussing the increased demand for domain-specific experts. Technological projects are becoming more and more intricate with time, so finding a suitable employee is paramount to a project’s success.

When you zoom out to look at the bigger picture, the same logic can also be applied to outsourcing software development companies. No two businesses are the same, meaning each bears their strengths and weak points. It would be ideal to work only with a single software outsourcing company for all the development needs, but the market’s changing demands have proven that utilizing multiple vendors with a wider range of specialties allows you to navigate the project efficiently, mitigate risks and enjoy cost savings in the long run.

Cloud Technology Services

Patient Registration and Electronic Health Records (EHR)

Cloud technology has come a long way. Cloud computing offers its users vast data storage, immense computational power without the need for local infrastructure, disaster recovery, and backup, Software as a Service, Platform as a Service, Infrastructure as a Service, and more. Gartner has even deemed Cloud Computing as “the key driver of business innovation.”

Another important note is that cloud computing is the gate to utilize all the trends we have mentioned so far. Therefore, make sure that you look for software development outsourcing companies that have a strong background in cloud services.

Integration of Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML are slowly becoming an integral part of our daily lives. Even though AI and ML have already been used in numerous areas of our lives, e.g. ultra-personalized movie or music suggestions, chatbots or voice commands, developers are working to expand the technology’s limitless capabilities so it would be even more present in our daily lives. Did you know that AI is now used by 35% of worldwide firms, and this year, half of them intend to integrate AI into their operations?

Generative AI like ChatGPT or Midjourney is only the beginning. Malaysia plans to construct a $425 million AI-enhanced container port along the Malay Peninsula to meet global supply chain demands, enhance operational efficiency, and boost economic growth. One study revealed that teachers find that AI does more good than harm.

All in all, AI and ML are developing at an astronomical rate, and this is the time to ride the waves and present the market with innovative products.

Sustainability and Green Software Development

With an outsourcing partner, not only do you cut the costs of hardware and electricity, but you can also reduce your carbon footprint significantly. The reduced office space also contributes to this reduction.

There are a few sustainability practices that businesses can adopt. To illustrate, effective data structures and algorithms, using energy-efficient hardware, lowering energy consumption by applying modular and reusable design patterns, and utilizing energy strategically are a few suggestions for developing software sustainably. As this trend grows and evolves, businesses should adopt sustainability as one of their core values, and hopefully, this will become the core value in the software development outsourcing industry.

Strong Cybersecurity Defense and Mitigation Strategies

Cybersecurity is almost always mentioned as a “trend.” It shouldn’t be a trend, but it should be more of an essential one. Listing it in the list of trends re-emphasizes its importance in our modern tech landscape.

Cybersecurity threats have always been one of the top concerns. However, with the advancement in AI technology, cyber attacks have become even more concerning and the damage therefore might be even more detrimental. Look for software development outsourcing services that are well-versed in cybersecurity practices. Make sure they are well aware of data security regulations like GDPR (General Data Protection Regulation) and are proactive when it comes to integrating security practices in the software development cycle.

Data Science

The talk about big data, data analysis, and data science, in general, prevails in our modern society. Why so?

Not only is data the new oil, but it also paves the way for businesses to create innovative and improved products, user interfaces, user experiences, and more. They provide developers and business owners with specific metrics to measure performance and make adjustments. Moreover, data science empowers businesses to make well-informed decisions and long-term plans and predict trends and user behaviors with confidence. Utilizing data science efficiently, in short, provides companies with a superpower.

This superpower can be achieved by having an outsourcing partner with strong analytical skills on your team.

What’s Next?

Trends change and evolve yearly. Nonetheless, the recent recurring themes that we can spot include a strong focus on security and data protection, the rise of cloud-based solutions supporting remote work, and a shift in priorities toward talent quality, user experience, and expertise. Continuous advancements in AI are also prominent, with predictions indicating that many of these trends are likely to persist. Having an idea of these recurring themes gives your business a better idea of what to prepare and expect, at least for the next year.

To conclude, knowing the upcoming software outsourcing trends offers you a competitive edge in the competition. What would further elevate your position, however, is having the right, credible business partner with over a decade of experience and a team of experts who make precise predictions every year, like Orient Software. Contact us today, and we will be happy to talk about your project visions and provide you with even more insights into the upcoming trends.

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