Home > Technology > IT Outsourcing Market Trends, Segmentation, Forecast to 2030
Straits Research

IT Outsourcing Market

IT Outsourcing Market: Information by Organization Size (Small and Medium Enterprises), End-User Vertical (BFSI, Healthcare, Media & Telecommunications), and Region — Forecast till 2030

Table of Content Download Sample

Market Overview

The global IT outsourcing market size was valued at USD 528 billion in 2021 and is anticipated to generate USD 781 billion by 2030. The market is projected to grow at a CAGR of 5% during the forecast period (2022–2030).

IT outsourcing is the external use of service providers to efficiently deliver IT-based business processes, application services, and infrastructure solutions for business results. IT outsourcing means that a company provides part of its software development outside the internal structure in order to reduce costs and control all processes. IT outsourcing services include application development, infrastructure and software support and maintenance, data center management, and other processes. 

IT has become a competitive advantage for most businesses. IT outsourcing is a technique for cost reduction with the cloud migrations and options of cloud services. Several studies have suggested that Application Development and Maintenance have become the most commonly outsourced functions amidst the partial IT outsourcing market trends. Additionally, distinction in offerings amid the presence of multiple players has led to the development of specialized teams. New contract models transform IT outsourcing into value-driven and interpersonal value, as well as the development of technical teams.

Market Snapshot

market snapshot
Base Year
: 2021
Study Period
: 2020-2030
CAGR
: 5 %
Fastest Growing Market
: North America
Largest Market
: Asia Pacific
Market Size
: USD 781 billion by 2030
Get more information on this report Download Sample Report

Market Dynamics

Market Drivers

  • Need for Efficient and Scalable IT Infrastructure Boosting Global Market

The future technology adoption plans hover around the adoption of newly emerging technologies that are predicted to grow significantly since many businesses have replaced outdated infrastructure. Public cloud giants like Google and AW; entail on-demand, dynamic, enormous scalability needs. The adoption of 5G is anticipated to lead to the need for efficient and alterable network infrastructure in the near future. The crush of the fifth generation networks is causing existing IT infrastructure to change across automotive, AR/VR, mobile connectivity, and telecommunications. Also, AI, IoT, and robotic process automation are changing the customer experience across fintech sectors, which enables the inclination for scalable IT infrastructure in the rouse of increased P2P transfers and global payments use of no-contact bank cards and management of cryptocurrency via digital channels.

Large enterprises have placed a priority on IT by adopting emerging technologies up to 5 times faster than small businesses. For example, according to SpiceWorks, 31% of large enterprises (companies with more than 5,000 employees) have chosen blockchain technology compared to 6% of small businesses. Approximately 70% of large enterprises plan to use hyper-converged infrastructure by 2021, while 68% plan to use edge computing technologies. Alternatively, as per Clutch. co, 52% of small business executives may continue to outsource jobs in 2020, with a preference for upgraded and scalable infrastructure. This adoption of software development outsourcing and cloud services has emerged as a viable option for small-scale organizations that want to scale by adding newer customers.

  • Reliance on Outsourced Vendors for Differentiation Surging Market Growth

For small or medium-sized businesses, the availability of highly trained technicians is easier with IT operations outsourcing. By employing multiple dedicated IT professionals, the larger companies cannot always find technology generalists to leverage upgraded network maintenance and security. From being a cost reduction tool to a key strategic player, digital transformations and organizations opting for AI, RPA, Cloud, and IoT have opened up the role of IT outsourcing. Security risks have increased with the software giants moving to the software-as-a-service (SaaS) model. Outsourcing security IT provides the benefit of 24/7 monitoring, with professional technicians who work to prevent and patch security breaches.

As a result, enterprises have started to focus on central competencies and influence IT as a competitive boundary. Managed IT service providers having large teams with trained specialists usually address the impossible situations. Outsourcing software applications has fastened the time-to-market for organizations that do not have a tech background as a core capability. As per Wipro’s State of IT Infrastructure Report 2020, 24% of organizations do not have a cloud partner. The study also states that the rapid evolution of software-defined resources and the emergence of AIOps to advance automation programs are likely to fuel revenues for the outsourcing vendors. IT outsourcing market companies are witnessing forming partnerships with vendors that have the expertise of working in specific areas, thus indicating a focused and narrower specialization in the future. The preference for a trusted service provider will increase because customers are increasingly concentrated on the place where their confidential information is hosted.

Market Restraints

  • Fragmented Market and Data Breaches Resisting Global Market

Many established and technologically driven players are available worldwide. The development of specializations is seen to fragment the market with the vendors being studied. The rivalry is expected to be high as multiple strategies have been adopted to enter into new emerging markets and acquire/partner with allied technology-driven companies. This has led to the development of incompatible technology stacks, forcing prospective buyers to remain with a vendor choice to obtain products and services. Such challenges to outsourcing are leading to companies being prone to multiple challenges like operational issues pertaining to communication challenges, scope understanding, ambiguous stakeholder views, and code quality lowering.

Moreover, the IT security budgets were averaging around USD 18.9 billion in 2019, with savings credited to internal cyber security, as per Kaspersky’s report. The companies with internal cyber security or security operation center (SOC) experienced around 50% of the financial loss. Outsourcing security to Managed Service Provider (MSP) has increased the financial impact, while the companies outsourcing SOC did not reduce financial loss due to data breaches. The report also suggested that nearly 23% of companies that use an MSP experienced a financial impact of USD 100,000 to USD 249,000. Comparatively, only 19% of businesses featuring an in-house IT team reported the same level of damage.

Segmental Analysis

The global IT outsourcing market share is categorized by organization size and end-user verticals.

Based on the Size of the Organization

The large enterprise is the major shareholder in the global IT outsourcing market. The market revenue was valued at USD 329 billion in 2021. Reduction in implementation costs, reduction of wait times, and increased productivity are the factors leading the larger enterprise to outsource IT. Increasing cloud adoption trends across large enterprises are driving the market revenues. The large enterprise segment is projected to generate USD 488 billion in 2030 and grow at a CAGR of 5% by 2030.

By End-User

BFSI is the largest market holder. It was valued at USD 151 billion in 2021. Media and telecommunications is anticipated to be the second-largest market holder. The packaging industry is driven by the growing demand for personal protective kits, face masks, face shields, and others, along with high consumers in developing economies. By outsourcing IT, banks can cut a lot of expenses, focus more on the core tasks and build user-friendly interfaces for the customers. Personal and streamlined bank services and real-time data collection and analysis are added advantages to the banks. These developments are boosting IT outsourcing market in banks. The BFSI segment is projected to generate USD 226 billion in 2030 and grow at a CAGR of 5% by 2030.

Regional Analysis

Asia-Pacific to be the Largest Revenue Holder in the Global Market

Based on region, the IT outsourcing market share is segmented into North America, Europe, Asia-Pacific, Latin America, and Middle East Africa.

Asia-Pacific is anticipated to hold the largest market share of USD 349 billion by 2030 at a CAGR 6% during the forecast period. The market in Asia-Pacific was valued at USD 214 billion in 2021. Cost factors and talented skill pool have played a key role in driving the market in this region. India is the largest contributor to the market compared to other countries, which was valued at USD 55 billion in 2021. China is growing its market gradually, with market revenue of USD 40 billion in 2021.

North America is the second contributor to the IT outsourcing market, with revenue of USD 172 billion in 2021. The cost-cutting, expansion of footprint, and adoption of cloud, RPA, and AI transitioning are the factors for the soaring market. The US contributes maximum to the market with USD 161 billion in 2021.

The IT outsourcing market in Europe is expected to witness steady growth with a value of USD 16.655 billion in 2021. Cost reduction is the main driver in planning to outsource more, followed by the business transformation and improvement of service quality. The UK and Germany have more market revenue compared to Italy and France. The market revenue of the UK and Germany were valued at USD 28 billion and USD 22 billion, respectively. 

Latin America and Middle East & Africa have the lowest market. In 2021, the market revenue in Latin America was valued at USD 14 billion, with Brazil being their major contributor. The market value of Middle East & Africa was USD 9 billion in 2021, with GCC being their major contributor.

IT Outsourcing Market Regional Analysis
Regional Growth Insights Download Free Sample

Top Key Players of IT Outsourcing Market

List of Top IT Outsourcing Market Companies

  1. IBM Corporation
  2. DXC Technologies
  3. Accenture PLC
  4. NTT Corporation
  5. Infosys Limited
  6. Tata Consultancy Services
  7. Cognizant Technology Solutions Corporation
  8. Capgemini SE
  9. Wipro Limited
  10. Andela Inc
  11. WNS Global Services
  12. Pointwest Technologies
  13. ATOS SE
  14. Amadeus IT Group
  15. Specialist Computer Centres (SCC)
  16. HCL Technologies Ltd

Report Scope

Report Metric Details
CAGR 5%
Forecast Period 2023-2031
Report Coverage Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends
Segments Covered
  1. By Organization Size
    1. Small and medium enterprises
    2. Large enterprises
  2. By End-User Vertical
    1. BFSI
    2. Healthcare
    3. Media & Telecommunications
    4. Retail & E-commerce
    5. Manufacturing
    6. Other End-user verticals
Geographies Covered
  • North America
  • Europe
  • APAC
  • Middle East and Africa
  • LATAM

Recent Developments

  • In March 2021, Capgemini announced a five-year agreement with the Metropolitan Police Service (MPS), the UK’s largest police service, to become its strategic IT
  • infrastructure services provider.
  • In March 2021, SCC AVS partnered with Utelogy to enhance the management, monitoring, and control of video-enabled workplace software solutions. 
  • In March 2021, TCS launched a new version of its Data and Analytics Target Operating Model, which allows customers to evaluate the data and analytics and further leverage it to get business transformation outcomes with Microsoft Azure.
  • In February 2021, WNS announced that they deployed a custom intelligent automation solution in collaboration with Automation Anywhere to equip Virgin Atlantic to process the sudden spike in COVID-19-related refund requests with speed and efficiency while maintaining customer service standards. 
  • In December 2020, Cognizant acquired Inawisdom, a UK-based company dealing with artificial intelligence, machine learning, and data analytics, to provide solutions for businesses dealing with data and artificial intelligence, cloud, digital engineering, and the Internet of Things.
  • In December 2020, Infosys Limited partnered with Vanguard to provide outsourcing services for software development.
  • In November 2020, DXC Technology and Tradeshift completed an agreement to transform account payable and procurement processes. 
  • In July 2020, Andela announced a shift from its old operational model to one without any physical offices to steer Andela into an online marketplace accommodative to African developers willing to apply. Andela announced that it would accept engineers from all African countries, expanding its presence from six countries to the entire continent. 
  • In June 2020, HCL Technologies and Google Cloud announced the expansion of their strategic partnership to bring HCL's software offerings, starting with HCL Commerce, to Google Cloud. 
  • In June 2020, ATOS completed its partnerships with Microsoft to jointly address the fast-growing SAP HANA market.
  • In June 2020, Amadeus completed its strategic agreement with Vinci Airport to provide a platform for automation to modernize Belgrade Airport.
  • In June 2020, Wipro Ltd announced that it reached an agreement to acquire Capco, a London-based technology consultancy, for USD 1.45 billion.
  • In February 2020, NTT Security Limited partnered with the Oklahoma Office of Management and Enterprise Services to offer its outsourcing services to the latter. 

IT Outsourcing Market Segmentation

By Organization Size

  • Small and medium enterprises
  • Large enterprises

By End-User Vertical

  • BFSI
  • Healthcare
  • Media & Telecommunications
  • Retail & E-commerce
  • Manufacturing
  • Other End-user verticals

By Region

  • North America
  • Europe
  • Asia-Pacific
  • Latin America
  • Middle East & Africa
Price Starts From
USD 995

Purchase Benefits

  • Eligible for a free updated report next year
  • Completely customizable scope
  • 30% discount on your next purchase
  • Dedicated account manager
  • Query resolution within 24 hours
  • Permission to print the report
Want to learn more about recent trends and data ?
They Already Trust Us :
Sony
Samsung Electronics
Qualcomm
Google
Fiserv
LGE
Panasonic
Amazon
Need Assistance?
+1 646 480 7505 (U.S.)
+44 208 068 9665 (U.K.)
sales@straitsresearch.com

Report Benefits

  • Develop business strategies by understanding the trends shaping and driving the Market.
  • Drive revenues by understanding the key trends, innovative products and technologies, market segments, and companies likely to impact the Market in the future.
  • Formulate effective sales and marketing strategies by understanding the competitive landscape and by analysing the company share of market leaders.
  • Identify emerging players with potentially strong product portfolios and create effective counter-strategies to gain a competitive advantage.
  • Track sales in the global and country-specific Market.
  • Organize your sales and marketing efforts by identifying the market categories and segments that present maximum opportunities for consolidations, investments and strategic partnerships.
Report Snapshot
Looking For Custom Report ?
Check Our License Options :

As featured on :

clients
Trusted by Fortune 500
Over 30000+ subscribers