14 May 2020
Top 5 It Outsourcing Trends For Any Successful Business

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Top 5 IT Outsourcing Trends For Any Successful Business


IT outsourcing (ITO) is a bridge between skilled expertise and business, a solution for increasing efficiency and managing risk. Since an ITO market covers a large range of technical matters, there are several things that need to be taken into consideration when considering outsourcing. These 6 IT outsourcing trends in 2020 can be the guideline for your business to gain a competitive edge in the industry.

IT Outsourcing Trends 2020

1. Focus on quality, not price


It’s evident that outsourcing software development helps cutting costs, however, it shouldn’t be the first reason to be taken into account since ‘it all comes with the package’ they said. IT service providers are engaged in a price war where they will be squeezed so hard that they can barely deliver any good value other than operational delivery. 


2. Vietnam, a new destination of IT services providers 


According to ZDNet, the Asia continent has dominated the global outsourcing market, the first three spots in the charts are all Asian countries. Along with India, the Philippines, and China, Vietnam is one of the attractive choices when it comes to software engineering outsourcing. Over the past decades, Vietnam has been experiencing a dramatic economic growth, especially in the year 2020, Vietnam’s Economy is still projected to Grow Fastest in Southeast Asia Despite COVID-19: According to ADB (Asian Development Bank). This is, indeed, the new paradise for software and engineering outsourcing.


For so many years, big MNCs like Intel, Samsung, Microsoft have chosen Vietnam to be their software project contributors. In the first half of 2018, Vietnam’s software exports reached VND34.2 trillion. In 2020, even big names in the industry such as Apple have been searching for many talents in the Vietnam market, with jobs ads placed on LinkedIn. Many roles are being recruited including camera ops test engineering, new product manager, and regional operations (VNExpress 2020). Currently, it could be said that the IT industry in Ho Chi Minh City is more mature than Hanoi in terms of working culture.


Likewise, Vietnam has a few thousand IT graduates a year to join the talent pool which helps to solve the problem of shortage in IT professionals found in many western countries.


The convenient geographic location and timeline is also another reason why Vietnam is an outsourcing country for many Western countries like Canada and America. People can easily travel back and forth between major city centers. Moreover, the work is being completed overnight due to the time zones differences.


3. Offshore outsourcing


Offshore outsourcing brings multiple benefits to businesses in various ways including cutting costs but maintaining efficiency and effectiveness. In the IT industry, the most important part of choosing offshore outsourcing is making an evaluation of which country is qualified enough to not only deliver the work but also maintain high-quality standards throughout the working process. 


Despite the same skills you can find in your local market, cost-benefit is the first reason many businesses take into consideration when outsourcing. There is a slight, if not saying quite a big difference between the pay gap in Asia and Western countries; therefore, a lot of SMEs go with engineering outsourcing to save their cost. However, businesses should always conduct some research about the average pay rates in one specific country to make sure that low cost does not go with low quality. 


Outsourcing software development also allows businesses to focus on their major tasks and on internal staff training. Because outsourcing helps bring expertise to the company, this is a chance for employees to work with and learn from them. 


4. IT service providers are now strategic partners


Unlike years ago, the agreements between customers and software companies now will lean more on the project outputs. IT service providers will not only be someone who only delivers products but also to assure the products’ success.

Because all clients now have various options to maximize their success and minimize their cost, the IT industry will be extremely competitive in the next two years.


5. A growing number of outsourced IoT, AI, and blockchain projects


As we are all diving deeper into the world of technology and digital transformation, many businesses from SMEs to MNCs are investing huge amounts of resources in AI, IoT, and other technology-related projects. It is predicted that the worldwide Internet of Things market revenue will be around $1.56 trillion in the next five years (per Statista) and the Artificial Intelligence market will increase dramatically 9 times more than 2018, which equals to $190.61 billion in 2025. 


AI and IoT are rapidly becoming a trend in the world due to its applicability. Third-party contractors are needed for companies to get access to their talents.


If businesses are lacking in-house IT talents who are capable of providing the engineering expertise for digital transformation projects, it becomes one of the reasons leading organizations to outsource. In order to bridge the gap found in specialized IT skill sets, it is essential to hire an offshore software company, who can provide dedicated development focusing solely on your project.


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