The time of taking stock of the outgoing year is coming. I don’t really want to ride on the wave of hype around it, so I will do it now. Two and a half months before the party starts. Today, we will take a look at what happened with outsourcing in 2021.

What changes has it undergone? What IT outsourcing trends can we observe? What can we expect in 2022?

I will begin with two spoilers. First, our journey will be gripping. And second…

Spoiler: Why Outsourcing Will Live Long and Prosper?

The last two years proved that a common virus can easily adjust (to say the least) our plans. One thing is still clear – our world is getting more and more digitalized. Today, going digital is a must for the competitiveness and vital activity of the business.

The Global Digital Transformation Market is forecasted to grow from USD 469.8 billion in 2020 to USD 1,009.8 billion by 2025. A Compound Annual Growth Rate (CAGR) is expected to reach 16.5% by 2025. Dry statistic speaks louder, doesn’t it? Let’s go deeper.

Digitalization is impossible without innovations. Innovations, in turn, boost demand for software and apps developers. In this system, outsourcing found its place. It has alternatives but its benefits are attracting more and more sympathizers.

High flexibility. No geographical borders.

Access to a vast pool of specialists and narrow specialists lacking in an in-house team. Short-term collaboration within one project (even within one task) is possible. These perks strengthened the positions of outsourcing in the last years.

Despite the pandemic, spendings on outsourcing increased from 12.7% in 2019 to 13.6% in 2020. Will the figures grow? I assume yes. The future of outsourcing is promising. I am sure that outsourcing (in any form) will live long and prosper :)

outsourcing

And now, let’s finally analyze the outsourcing trends of 2021!

Focus on Quality over Austerity

High quality and use for the customers are becoming as important values and goals for businesses as profit. Not that the companies became less profit-oriented. No one will work at a loss :) Just the result and the quality of the products and services started playing more valuable roles than before. Businesses, especially small ones, are becoming more conscious about what they produce and how they interact with customers.

For outsourcing companies, it means focusing on quality and customization. And that’s where small players have a head start. They often offer custom software solutions, a unique approach to every client, and a focus on technology.

Long-term Collaboration and Strategic Partnerships

Some companies prefer working with multiple vendors, while others strive for long-term collaboration. Figuring out what was more common in 2021 is a holy war. What I noticed though is that companies working with Fulcrum prefer a strategic partnership.

Our client BUFF completed its IPO on the Tel Aviv Stock Exchange, raising $9.3 million.

As long as one vendor satisfies the needs of the company, long-term cooperation wins. Among other things, it reduces the risks related to managing several teams.

As a result, the vendor’s role shifts from a passive executor to a legitimate team player. It entails participation in decision-making, strategic planning, risk assessment and prevention.

Outsourced teams are now in the same league as in-house employees.

Ability to Be Flexible and Adapt to Unpredictable Circumstances

One of the most predictable IT outsourcing trends of 2021 is adaptability and agility. The business environment became more volatile due to the pandemic. The skill that helps the companies to keep the lights on is the ability to adapt. The same they expect from their vendors.

The ability to adjust to the rhythm of the company is a must.

It means ramping things up and down, restructuring the team, delivering the results faster, or being ready that the task is put on hold. The ability and the desire to assimilate into the company, synchronize with its ethics and in-house team is also important. Last but not least is the speed of reaction to innovations.

How quickly can you integrate innovation into your workflow? How quickly can you upskill your team? It all influences collaboration.

Read more: Outsourcing Fiasco: Painful Lessons from IT Outsourcing Gone Bad

Increased Interest in Good Niche Specialists

Catching up to the rapidly changing world of technologies is a challenging task. Deadlines, hundreds of operational tasks, and limited resources of the in-house team make it more challenging. Constantly mushrooming innovations result in continuous upskilling of the in-house employees. And I must admit – it’s costly :)

In this case, the demand for narrowly specialized software companies appears and grows. They complete small tasks or the whole project when in-house employees don’t have the needed skills. And you have deadlines.

Read more: The Juicy Guide to Choosing the Right Outsourcing Vendor

Transparency of the Workflow

One of the outsourcing trends that is already one of Fulcrum’s core values is transparency. Why is it important? Transparency is the foundation of trustful relationships.

Trustful relationships, in turn, are a framework for successful cooperation. Also, the more information a vendor reveals the more control over the process a client has. It also results in his preparedness for challenges.

Guidelines and questions to ask your development agency

As a vendor, Fulcrum shares information about organizational structure, capabilities, tech stack, approaches at the negotiation stage. During collaborations, we encourage clients to look behind the scenes and keep up with development. We inform about any challenges, issues, and delays when we still have time to fix them.

Relationships between a vendor and a client are transforming. They become more trustful. And both parties benefit from it.

Implementing RPA & AI Technologies and Machine Learning

A new McKinsey Global Survey showed that 40% of the large companies have automated at least one function. Among small companies, this figure is 25%. Speaking of the RPA market, its CAGR is expected to grow by 32.8% between 2021 and 2028.

RPA is riding on the wave of success of business automation. RPA technologies share the burden of repetitive operational tasks with companies. Bots and virtual assistants imitate routine cognitive human tasks. Hence, businesses have more time for complex, strategic objectives. Such things as payment processing or supply chain management stop draining so much attention and resources. Other advantages are reduced operational expenses, better work coordination, fewer manual mistakes.

Apart from RPA innovations, companies implement cognitive technologies. Speech recognition, AR and VR, and machine learning automate higher-order tasks that required human cognitive skills in the past.

Among other IT outsourcing trends is the implementation of AI technologies. They mitigate security risks and help to avoid common manual mistakes. Besides, they allow processing information promptly and speed up a response time due to the use of chatbots. Their quality, by the way, has improved markedly over the past year. They became more than just human support backup. They have become full-fledged guides for clients in choosing a product or service. Customer service and productivity overall is improved.

Vendors, who implement AI innovations in their workflow, stay competitive in the market.

The Explosive Growth of the Global Cloud Computing Market

Another global digital trend I’ve been observing throughout the year is the rising demand for cloud computing. The amount of data to be stored is growing exponentially. It results in a need for secure online data centers, reliable data protection, and equipment. Companies want to speed up data operations and refine business processes with modern business apps. More and more businesses want to transfer their infrastructure to the cloud.

Who can assist in it? Among others, outsourcing companies offering cloud-based and security services!

The global computing market is projected to bloom. It’s forecasted to reach USD 791.48 billion by 2028, with a CAGR of 17.9%. So, if you are still not in the game, it’s a perfect time to say “I’m in!”.

Increased Interest in PWA Outsourcing Vendors

My personal outsourcing statistics show that more and more companies choose progressive web applications over ordinary mobile apps. This technology equips a website with the functionality and the look of a mobile app. So, it’s a mobile app in a browser.

How did this technology become a global trend of 2021?

The first premise is hidden behind Google algorithms that are unfriendly to websites without a mobile version. The second premise is customers, who prefer mobile apps due to their convenience. An average mobile conversion rate boosts by 20% after a switch to PWA. Since the implementation of the PWA in 2017, Starbucks reported a 2x increase in their daily active users.

Besides, progressive web applications are easy and cost-effective in development and maintenance. That’s why vendors, who help to implement this technology, are still in high demand.

PWA as an outsourcing trend.

A Growing Need for Blockchain Services

A need for transparency and security in data storage and online transactions leads to increased demand for well-seasoned blockchain specialists. This is a constantly evolving sphere. Hence, most companies have been reluctant to invest in upskilling of their staff preferring outsourcing. Since this is a relatively young niche, there are plenty of “vacant seats” for vendors regardless of their location.

IT Outsourcing: the Good, the Bad, and the Ugly | Fulcrum Rocks

We are living in a world where quality, flexibility, and speed are more important for collaboration than cost-effectiveness, much less geography. One of the most visible IT outsourcing trends in 2021 is a focus on vendors from Eastern and Central Europe. Why? In short, because of a reasonable value proposition in these markets. Here we explain why outsourcing to Ukraine is a good choice.

Read more: Major Companies Outsourcing to Ukraine in 2021 – the Full List

If you are convinced and looking for an enthusiastic Ukrainian vendor for your project, Fulcrum will gladly assist you! Book a call to find out if we are a perfect match for you :)