Uncovering the latest software outsourcing statistics in 2023
Software outsourcing is a rapidly growing industry and is foreseen to continue growing in the coming years. In 2023, software outsourcing statistics are expected to be more impressive.
In this article, we’ll explore briefly what software outsourcing is and provide an overview of relevant statistics. We’ll look into the countries and regions likely to be the biggest players and the top companies set to maintain their position or make a splash.
Finally, we’ll examine the benefits of software outsourcing for companies.
Software outsourcing statistics
“Software outsourcing is estimated to reach $430 billion by 2023.”
– Source Statista
“North America’s software outsourcing market volume is poised to grow to $227.40 billion by 2027.”
– Source Statista
“Software outsourcing revenue is expected to show an annual growth rate (CAGR 2023-2027) of 7.54%.”
– Source Statista
“Revenue for the software outsourcing industry in Europe is expected to hit $138.20 billion in 2023.”
– Source Statista
“Software outsourcing in Asia is set to show an annual growth rate (CAGR 2023-2027) of 9.16%.”
– Source Statista
“The global IT and software outsourcing market size is forecasted to attain a worth of around $1.06 trillion by 2030.”
– Source Precedence Research
“Cloud-based solutions in software outsourcing are expected to grow to USD 141.2 billion by 2027.”
– Source Market Research
“The global outsourced QA and software testing market will grow at a CAGR of 11%.”
– Source Technavio
“Software development outsourcing is anticipated to grow by 70%.”
– Source Commit
What is software outsourcing?
Software outsourcing is the practice of hiring a third-party company to develop and maintain software applications for a business. This is often done to reduce costs, increase efficiency, and access specialized skills, resources, and new markets.
Software outsourcing involves various services, such as custom development, maintenance, testing, and integration.
Companies can outsource the entire software development process or just specific parts. Software outsourcing frequently incorporates cloud computing, which allows companies to access software applications and services from remote servers.
A brief overview of software outsourcing statistics
Here’s a quick overview of some key worldwide software outsourcing statistics.
The global market value of software outsourcing is estimated to reach $430 billion by 2023. The United States ranks as the top country in revenue, followed by Japan, the United Kingdom, China, and Germany.
The most popular software outsourcing services are software development, application development, and IT services.
Poland, the Czech Republic, Romania, India, and China are the most common countries to outsource software.
Lastly, the leading industries for software outsourcing are healthcare, finance, and retail.
A global look at software outsourcing statistics
This section will take a look at the software outsourcing statistics by region, specifically the three largest regions that utilize outsourcing.
North America software outsourcing statistics
Software outsourcing is a growing trend in North America, with many businesses taking advantage of the cost savings and access to specialized skills that outsourcing can provide.
Previous years have shown the most prominent software development companies come from Eastern Europe, India, and China. In recent times, the outsourcing scene in North America has been gaining momentum.
There are several reasons behind this rapid growth, one of which is that North America has become a hub for innovation and technology.
Many of the world’s leading technology companies are based in North America, creating a thriving ecosystem for tech startups and entrepreneurs.
Software outsourcing companies can thrive in this environment. With highly skilled talent and robust infrastructure, these firms deliver high-quality services at competitive prices.
According to reports from Statista:
- Software outsourcing revenue in North America is expected to hit $170 billion by 2023.
- By 2027, the software outsourcing market volume is poised to grow to $227.40 billion.
- Software outsourcing revenue is expected to show an annual growth rate (CAGR 2023-2027) of 7.54%.
- In 2023, the average cost spent on an employee in the IT and software outsourcing segment is projected to reach $680.30.
- Most revenue will be generated in the United States, with an estimated $156.20 billion in 2023.
- Software outsourcing will increasingly be seen as a viable cost resilience strategy in an environment where companies are looking for savings more than ever.
Europe software outsourcing statistics
In the last decade, the software outsourcing industry has seen significant growth in Europe.
Most businesses have realized that software outsourcing can increase their profits and help them deliver better products faster than before.
According to reports from Statista:
- Revenue for the software outsourcing industry in Europe is expected to hit $138.20 billion in 2023.
- In 2027, the market volume for software outsourcing is poised to reach $186.40 billion.
- Revenue for software outsourcing is expected to show an annual growth rate (CAGR 2023-2027) of 7.77%.
- The average cost of an employee through software outsourcing is projected to reach $342.10 in 2023.
- The United Kingdom and Germany are set to project the highest revenues in the European software outsourcing industry.
Asia-Pacific software outsourcing statistics
The Asia-Pacific region has been the hub for software outsourcing for decades, with India being the leader in the space.
The country continues to be one of the top destinations for companies looking to outsource their software development needs. However, other countries are catching up quickly and becoming major players.
In fact, the region is expected to see a lot more competition over the next few years as more countries start offering competitive rates and services.
According to reports by Statista:
- Revenue for the software outsourcing sector is expected to reach $95.85 billion in 2023.
- A market volume of $136.10 billion is anticipated to be hit in 2027.
- Software outsourcing in the Asia region is set to show an annual growth rate (CAGR 2023-2027) of 9.16%.
- The average cost per employee for software outsourcing is projected to reach $46.26 in 2023.
- Japan and China are seen to be the highest revenue generators.
Top software outsourcing companies in 2023
This section will list some of the top software outsourcing companies going into 2023. For a longer and more comprehensive list, see here.
Arcanys is a Swiss software development outsourcing company and a leader in the industry. It specializes in assembling highly trained and committed development teams for startups and existing companies in need of reliable apps.
Arcanys has consistently been featured as a top software outsourcing firm. Its operations are seen to expand as it enters 2023.
e-Zest is an internet technologies development and software outsourcing partner for businesses, software companies, and government agencies.
This company believes that growth and creativity come from a consistent emphasis on learning, collaboration, and results.
e-Zest has been on the rise, including being featured as an “Emerging and Expansive Player” in a Zinnov Zones report.
ScienceSoft has grown in its niche of providing software outsourcing services to midsize and large companies seeking an IT partner.
The company is known for its deep expertise in complex enterprise solutions and IoT, big data, and AI/ML. ScienceSoft has an estimated annual revenue of $124 million per year and has experienced a 21% growth in employees.
Sumatosoft is a software outsourcing company that follows the idea of transparent cooperation and excellence of work.
Sumatosoft helps to digitize their clients’ businesses. They provide exemplary web and mobile development services and bring innovations like IoT, blockchain, and the SaaS model.
Sumatosoft’s annual revenue was estimated at $11.2 million, with an impressive 31% employee growth.
Trends to look out for in software outsourcing
Here are some expected trends in software outsourcing.
Increased demand for software outsourcing
More organizations are expected to get a piece of the pie by utilizing software outsourcing services. The total market size is therefore predicted to grow significantly.
The global IT and software outsourcing market size is expected to attain around $1.06 trillion by 2030. From being valued at $530.15 billion in 2021, a growth rate of 8.06% from 2022 to 2030 is forecasted.
Growing preference for cloud-based solutions
The market size for cloud-based solutions in software outsourcing, particularly data management and cybersecurity, is expected to grow.
The value will increase from $34.0 billion in 2022 to $141.2 billion by 2027 at a Compound Annual Growth Rate (CAGR) of 32.9% during the forecast period.
Increased focus on automation
Tempo’s survey revealed that 46% of top software development executives agree that automation is key to growing software development. Issues like wasting time on mundane tasks, low capacity, outdated processes, and lack of talent can be solved through outsourcing.
Growing adoption of agile methodologies
It’s become a goal for many businesses to combine the advantages of outsourcing with the flexibility of the Agile development framework. The process requires a lot of collaboration but results in efficient projects.
As software outsourcing grows, expect attempts to mix in Agile methods to be close behind.
Increased focus on quality assurance
Quality assurance (QA) is a specialized discipline that few firms have the resources or expertise to perform in-house.
Technavio, a leading market research and advisory company, predicts that the global market for outsourced QA and software testing will grow at a CAGR of 10.8% before 2020.
This number is only expected to rise as more companies see the benefit of outsourcing.
Why go for software outsourcing?
Software outsourcing is becoming increasingly popular among companies of all sizes. More managers are becoming aware of the numerous benefits they can get.
According to a recent study from leading global tech services company Commit, software development outsourcing is expected to grow by 70% this year.
One of the primary benefits of software outsourcing is cost savings. Companies can save up to 70% on software development costs by outsourcing. This is especially beneficial for small companies with limited resources.
Additionally, software outsourcing reduces time to market, as organizations can access a larger pool of talent and tools to quickly deploy their software. You stay competitive in your industry and up-to-date with the latest technology.
In conclusion, software outsourcing will continue to grow in the coming years. This growth is driven by the increasing demand for cost-effective and high-quality software solutions and the need for businesses to stay competitive in this new digital landscape.
As the software outsourcing industry expands, businesses should take advantage of its opportunities to remain competitive and maximize their profits.