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Software Development Outsourcing: Current and Future Trends

Outsourcing is all about efficiency and quality, helping businesses ramp up their efforts while saving time and bringing their products and services to market faster and better. Learn more about it in this article.
Daniel Zacharias

Alex Petrovic

August 10, 2022
Software development outsourcing

Outsourcing is on the rise. According to a Clutch report, 90% of organizations said they were planning to outsource at least some business functions in 2022. It represents an increase of 10% since the previous year. The software sector, in particular, is seeing tremendous growth. Organizations of many different types are citing factors like efficiency, time savings, cost-effectiveness, and the need for specializations and expertise. Now that most businesses are involved in technology, regardless of their industry, the need for qualified partners is increasing. We’re seeing this in software development outsourcing in 2022 — and how we can expect it to evolve in the coming years.

1. Software development outsourcing is about survival.

Software outsourcing isn’t just about being competitive in an increasingly saturated landscape. It’s about your very survival as a business. 

Even if your business is not strictly a technology provider, it must utilize cutting-edge tools and practices, regardless of your mission, goals, and field. And if you lack talent, specializations, or sufficient staff in-house, outsourcing is the natural solution to addressing these shortcomings. It will help you stay afloat and thrive in a challenging landscape.

2. Nearshore software development outsourcing is gaining traction.

According to the Clutch report, more than one-fifth of small businesses say that in 2022, they plan to turn to a nearshore partner for outsourcing services. This is a recognition of the many benefits nearshore providers offer, such as:

  • Cost savings
  • Fewer language barriers
  • Time zone alignment
  • Compatible work cultures

Moreover, tech skills in Latin America, the primary nearshore destination for U.S. businesses, are growing. This is happening thanks to educational measures and investment in technology skills-building in the region. Business leaders can be confident that the partnerships will offer them value.

3. There is an emphasis on certain technologies and tools.

Increasingly, businesses are looking to incorporate timely, modern platforms and technologies into their folds, recognizing their popularity and potential to improve their reputations and brands and modernize their approaches. Today, businesses are turning to qualified external providers to craft platforms or offer solutions that relate to or involve:

  • Artificial intelligence (AI)/machine learning (ML)
  • Blockchain
  • Cloud computing
  • E-commerce
  • Internet of Things (IoT)

4. Specializations are in high demand.

Today, cybercriminals are able to penetrate 93% of company networks. In order to prevent malicious attacks on systems, organizations are outsourcing projects to white-hat or ethical hackers, who identify vulnerabilities and help organizations address them. 

Cybersecurity is one of the chief specializations organizations look for when outsourcing their software development projects. But in a market that has become niche-driven, the need to find specialized talent is becoming more paramount. In addition to cybersecurity, data science and user experience (UX) design are focal areas for organizations that want the best of the best for their software needs.

In fact, UI/UX designer is one of the most-outsourced functions today, at 34% — above even more general software development.

5. Scalability is a chief goal in software development outsourcing.

Growth is one of the ultimate goals for the majority of organizations, particularly startups. The Clutch report finds that scalability is one of the primary reasons small businesses outsource their services, with roughly one-fifth of companies with 251 to 500 employees saying this is their main motivation.

Outsourcing is all about efficiency, helping businesses ramp up their efforts while saving time and bringing their products and services to market faster. This also means the output is greater, and organizations can grow their businesses more effectively.

6. Clientele includes more startups and small businesses.

Well-established companies — even tech giants — like Google, IBM, Skype, WhatsApp, GitHub, Slack, GitHub, Sirius XM, Basecamp, Square, and Univision, have all outsourced software development projects to some extent. But businesses of all sizes and maturity are joining the outsourcing game.

Now, we are seeing more and more startups and small businesses outsourcing software development projects and processes. They do it as a means of reaching the market more quickly, ramping up their services, saving money, and improving efficiency, all while tapping into the top talent to hone their brands’ image.

7. Agile is the dominant approach.

The 15th Annual State of Agile Report indicates that Agile is by far the most popular approach in the world of software development, with in-house development teams and external providers alike employing it to guide their work and efforts . Agile is the natural choice in today’s landscape as a collaborative approach that responds to change and uncertainty.

According to the report, unsurprisingly, Agile adoption increased from 37% in 2020 to 86% in 2021. 

8. There is an eye on longer-term partnerships.

At one time, software outsourcing partnerships may have been formed on an as-needed basis, with external providers completing one-off projects. Now, businesses are looking to nurture long-term relationships. This benefits  both partners because they are better equipped to become accustomed to each other’s working methods, styles and approaches, team members, and workflows.

It also allows the partners to build trust and establish communication and collaboration methods that meet the needs of both organizations. The business will have a provider on hand whenever they have pressing software development needs — a provider they have created a strong relationship with.

As we look toward the future of software development outsourcing, we can see that the model is here to stay for will become a more ubiquitous and fruitful solution for organizations across industries. All organizations must ramp up their technological prowess in this day and age, and outsourcing will deliver on this promise.

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