Outsourcing software services are on the rise. According to a study by Computer Economics, large organizations have increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7% this year. Medium-sized companies too increased their budgets from 4.7% to 6.5%. The use of software development outsourcing helps companies decrease costs and get their product to market faster, so it’s no wonder companies large and small are taking advantage of this trend.
In 2018 outsourcing will likely continue to rise, but we’ll most likely see certain industries take more advantage of this opportunity. Here are the top five outsourcing trends for 2018.
1. Application Development
37% of the companies that already outsource application development plan to increase the amount of work they outsource next year. This statistic makes sense given that app downloads have increased from 167.05 billion in 2015 to an expected 253.91 billion by the end of 2017. Companies are finding success with applications and outsourcing the development allows optimal staffing options and reduced costs.
2. Machine Learning
Machine learning, a branch of artificial intelligence (AI), gives computers the ability to learn on their own. Machine learning has enormous potential across industries such as healthcare, finance, and high tech, which is why companies are investing billions in this technology. McKinsey estimates that in 2016, the investment in AI was between $8 billion and $12 billion and machine learning was roughly 60% of that total investment. The power of machine learning is great, but the cost of the technology to produce AI-based products is high, which is why organizations will consider outsourcing options in 2018.
Security risks are growing, which is no wonder that 47% of respondents said that they plan on increasing the amount of work that they outsource in this sector. Global spending on cybersecurity products and services is expected to reach $1 trillion over the next five years, as companies look for ways to respond to the rise of online threats. More companies seem to be outsourcing security services to rely on experts and stave off breaches.
4. Technical Human Resources
Deloitte conducted a study that found businesses increased HR outsourcing from 22% in 2014 to 32% in 2016. Furthermore, most of these organizations plan to continue or increase outsourcing HR tasks. From finding new talent leads to handling tedious company tasks, outsourcing HR helps companies reduce costs and reallocate internal resources to more pertinent tasks. Companies will likely outsource not only HR projects but also the creation of an HR platform to help the company better onboard new staff and manage contracted team members.
5. Internet of Things (IoT)
The world of IoT is exploding as consumers want more connected and smart devices. Global spending on IoT in all industries was $737 billion in 2016, and IDC predicts this number will grow to $1.29 trillion by 2020. Inmarsat found in a survey of 500 executives that 46% identified a deficit of staff with experience in analytics and data science, which is why companies will look to outsource IoT projects to developers with experience.
Software outsourcing is clearly here to stay, especially with the rise of new technologies and the skills gap that prevents companies from hiring internally. As businesses invest more and more into expensive projects in AI and IoT, the need to outsource to save resources becomes vital. As we head into 2018, we’re likely to see outsourcing increase in all of these fields.