IT outsourcing trends in 2021 [+IT outsourcing statistics]

Want to know what IT outsourcing trends will dominate the global market in 2021?

Sink your teeth in our data-based research on the global IT outsourcing trends in 2021.

We’ve scoured the web and organized the most important IT outsourcing statistics on the global tech talent shortage, the growth of IT outsourcing volume, 5G, and AI — the world’s major IT outsourcing trends for the upcoming year.

The value of IT services companies delegate to external suppliers may exceed $413.72 billion by the end of 2021, says Statista.

And the value of the IT outsourcing market is expected to grow by about 5% each year in the years 2020–2024, according to the Global Industry Analytics report.

The tech talent shortage is the major long-lasting trend that has been fueling the IT outsourcing sector for the last decade. Consequently, tech businesses have been growing more confident about hiring dedicated developers and getting managed services.

The gap between 1.4 million open tech vacancies (US labor statistics) and only 400,000 CS graduates in 2020 will result in an unrealized output of $162 billion in 2021.

The global tech talent shortage amounted to 40 million unfilled jobs in 2020. By 2030, the shortage is predicted to reach 85.2 million workers. During these 10 years, the skill shortage will cause an $8.4 trillion loss in revenue for companies worldwide.

• McKinsey’s survey shows that 87% of organizations are already experiencing a talent shortage. 
• Sweden alone will be short of 70,000 developers or digital-related specialists by 2022.
• Israel, one of the top three tech startup nations of the world, is experiencing a 15% software developer shortage.

• McKinsey’s survey shows that 87% of organizations are already experiencing a talent shortage. 
• Sweden alone will be short of 70,000 developers or digital-related specialists by 2022.
• Israel, one of the top three tech startup nations of the world, is experiencing a 15% software developer shortage.

Statista predicts that more than 2.14 billion people worldwide will be purchasing services and goods online in 2021.

Compared to 2019, when about 14.1% of all retail sales were made online, in 2021, we’re expecting to have 22% of all retail purchases made online.

Nasdaq goes even further, making a prediction that by 2024, about 95% of all retail purchases will be made online.

The statistics only confirm that the technical transformation efforts of online businesses will be aimed at making online shopping more convenient.

Also, businesses with an online presence will heavily invest in building top-notch online shopping platforms.

Social commerce strategy is also growing among online businesses to integrate online shopping with social media.

However, they’ll need to do it quickly because: 

• Amazon already takes about 38.7% share of eCommerce sales in the United States.
• About 40% of businesses are planning to adopt virtual assistants in 2021.
• More than 47% are expected to implement chatbots for improved customer support services.

• Amazon already takes about 38.7% share of eCommerce sales in the United States.
• About 40% of businesses are planning to adopt virtual assistants in 2021.
• More than 47% are expected to implement chatbots for improved customer support services.

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While the current worth of cloud computing has reached a high mark of $180 billion worldwide, the SaaS alone is expected to earn $113.1 billion in 2021.

The PaaS, SaaS, and IaaS markets grow by 24% annually. In two years, the global cloud computing market will be worth $623.3 billion. 

Yes, cloud migration is a demanding and costly process, but more and more businesses are planning to switch from on-premise to cloud-based data storing.

Cloud computing ensures better data protection, faster data operations, and the ability to modernize business processes by painlessly implementing various business apps.

The global quantum computing market will be worth $8 billion by 2027. This explains why we’ll see more businesses like Alibaba and Samsung test their quantum-computer generated theories in real life.

By the end of 2020, only a year after being released to worldwide markets, the global 5G services market value is estimated at $41.48 billion.

Huge success and wide adoption of 5G connection has brought analysts to the conclusion that the 5G industry will expand at an annual growth rate (CAGR) of 43.9% from 2021 to 2027.

What makes 5G one of the largest industries in the world?

Two major selling points of 5G are the number of devices connected to 5G and the speed of data exchange that will generate $47.4 billion in revenue by 2027.

According to Statista’s forecast on the number of 5G connections worldwide by region in 2021–2025, 5G will be widely adopted in China and the North American region in 2021.

Information technologies, telecom, and manufacturing are the top three digitized industries by speed of 5G adoption.

Thanks to 5G, businesses are able to develop robust Internet of Things systems that connect manufacturing, transportation, and other systems — and make their business processes more efficient and effective as a result.

In a decade, the global AI market is expected to be worth $15 trillion, and in 2021, the US AI market alone will generate $22.59 billion in revenue, according to Statista.

IBM, Samsung, and Microsoft are the key investors of AI startups in the world. Striving for immaculate yet cost-efficient customer services, tech giants are prone to switch to AI-based chatbots and robotic automation.

Areas within customer service in which AI is currently being used include bots and virtual customer assistants.

• More than 23% or one in four customer service organizations currently use AI-powered chatbots.
• Analysts predict that AI-based chatbots will facilitate 90% of customer interactions in 2022.
• Around 60% of millennials claim to be satisfied with the chatbot-aided purchasing process.

• More than 23% or one in four customer service organizations currently use AI-powered chatbots.
• Analysts predict that AI-based chatbots will facilitate 90% of customer interactions in 2022.
• Around 60% of millennials claim to be satisfied with the chatbot-aided purchasing process.

Zion Market Research expects the cybersecurity market to be worth $181.77 billion in 2021. By 2022, the market for cyber insurance is predicted to reach $20 billion.

Tech companies are now practically forced to work remotely, and without proper cybersecurity expertise, they become perfect targets for cyberattacks.

According to the 2020 HLB Cyber Security Report, 65% of British tech businesses were breached or exposed during the lockdown period.

Specialists estimate that the value of personal data stolen from social media users amounts to $630 million per year. 

On the bright side, the report by HLB shows that 55% of polled companies are planning to spend more on cybersecurity in 2021.

Important Cybersecurity Statistics from HLB Cyber Security Report:

• 55% of poll respondents said that they are planning to cut expenses on cybersecurity due to COVID-19.
• 51% are planning to hire a full-time cybersecurity team during 2021.
• 42% are satisfied with the quality of cybersecurity services they get and receive the best return against their cyber spend.
• More than 25% are planning to reduce cybersecurity budgets. 
• Only 13% won’t change their cybersecurity budget.

• 55% of poll respondents said that they are planning to cut expenses on cybersecurity due to COVID-19.
• 51% are planning to hire a full-time cybersecurity team during 2021.
• 42% are satisfied with the quality of cybersecurity services they get and receive the best return against their cyber spend.
• More than 25% are planning to reduce cybersecurity budgets. 
• Only 13% won’t change their cybersecurity budget.

Even though cybercrime is causing the business sector a lot of damage, cyberattacks are more frequently targeted at governments. This makes governments the main cybersecurity investors.

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The World Economic Forum claims that the number of permanent remote workers is set to double in 2021. 

Just like many other high-income industries, the IT sector has shifted to remote work after the strike of the COVID-19 pandemic.

However, even before the pandemic, the majority of tech businesses in popular outsourcing destinations such as Ukraine had been working in remote mode.

A report by Avasant shows that middle-sized tech companies have been the largest contributors to the growth of the IT outsourcing industry in 2020.

It’s also declared that the average outsourcing for midsize companies went from 9.1% to 11.8%. 

So while some tech businesses increased their IT budgets on the brink of the pandemic, the rest continued to work with their nearshore and offshore IT outsourcing partners to reduce development costs.

Despite the lockdown, the total IT budget rose from 12.7% in 2019 to 13.6% in 2020.

The trend shows that middle-sized tech companies are on their way to reducing their business structure in order to serve the business. 

According to Avasant, managed services will be used as a way to reduce the management burden, and the cloud will help reduce the physical infrastructure.

Desktop support, data center operations, help desk, and network operations are the four least outsourced IT functions in 2021. Let’s deep dive into the Avasant IT Outsourcing Statistics report:

• Application development is one of the most frequently outsourced IT functions in 2021. More than 60% of tech companies are outsourcing at least a part of their application development.
• Network operations dropped in IT outsourcing volume from 34% in 2019 to 27% in 2021.
• Around 55% of the study respondents informed that they will increase budgets for outsourcing cybersecurity functions.

• Application development is one of the most frequently outsourced IT functions in 2021. More than 60% of tech companies are outsourcing at least a part of their application development.
• Network operations dropped in IT outsourcing volume from 34% in 2019 to 27% in 2021.
• Around 55% of the study respondents informed that they will increase budgets for outsourcing cybersecurity functions.

Businesses will certainly continue to outsource jobs in 2021 to reduce operating costs, focus on core competencies, and hire high-quality experts.

Risk-sharing and deeper involvement are the new aspects of outsourcing we’ll observe in 2021.

In the following year, we’ll see the rise of the emerging IT outsourcing market located in Eastern Europe.

The tech world will erupt with robotic process automation and AI-powered customer services. 

The AI and AR/VR technologies will stimulate a sufficient rise of fintech, telecommunications, and healthcare.