Outsourcing as a Global Trend. Excerpts from "IT Outsourcing Statistics 2017-2018" Report

Daryna Tkachenko

By 2018, outsourcing has become a global trend, especially in IT sector. This article explains the term "outsourcing" and its main functions and presents the highlighted insights from the IT Outsourcing Statistics 2017/2018 report.

3 min read

Per IT Outsourcing Statistics 2017/2018 published by Computer Economics, outsourcing as a trend is gaining larger and larger popularity. The percentage of the total IT budget being spent on outsourcing rose from 10.6% in 2016 to 11.9% in 2017.

Trend for Outsourcing Growing in 2017 Compared to 2016.

The study was conducted in January - April 2017 and surveyed 131 IT organizations of different sizes in the United States and Canada. It profiled 10 most popular IT outsourcing functions, including application development and maintenance, to inform staffing decisions by executives of IT companies and provide market trends for both service providers and IT companies. Many IT functions have a long history of outsourcing, so nowadays companies more often engage in partial outsourcing, retaining at least part of the workload in-house. Logicify has been vast experience offering outsourcing services, and we would be glad to discuss your needs in IT outsourcing. Contact us now!

Following Computer Economics definition,

outsourcing is contracting an onshore, nearshore, or offshore service provider to perform an IT function that is commonly performed in-house.

The major outsourcing trends outlined in the report are as follows:

  • Application development and maintenance are the most frequently outsourced functions.
  • Functions with the greatest potential for improving service through outsourcing are IT security, disaster recovery, application maintenance, and database administration.

Though outsourcing is becoming more attractive to all organizations, large companies are growing IT outsourcing budgets the fastest. They increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7%. Small organizations spent 7.8% of their IT budget on outsourcing in 2017, compared to 6.7% in 2016. Midsize companies have increased their spending, on the average, from 4.7% to 6.5%.

Outsourcing Statistics in Organizations of Different Sizes.

There are many reasons why an organization should outsource. In the first line, outsourcing allows a company to improve its operational flexibility by engaging more professionals in different spheres of knowledge. It is also a great way to augment an in-house personnel without long-term commitments. A strategic decision to outsource would help a company to save capital investments and reduce management overhead. Companies should also consider outsource as an option to get a reliable technical partner, especially if they expect company growth or need to rapidly deploy new capabilities. If there is a need for professional services that are not the company’s primary focus, then hiring an outsourcing team is also a nice option.

Top 10 Outsourced IT Functions

Application development (a service provider is responsible for developing new or enhancing existing systems)

Application maintenance (a service provider takes over ongoing maintenance of existing systems)

Data center operations (a service provider alone or with the in-house teams operates the data center)

Database administration (an outside provider monitors and tunes databases at the physical or logical levels)

Desktop support (a service provider is responsible for installation, maintenance, or support of PCs)

Disaster recovery (an outside provider is responsible for off-site data storage, recovery data centers, or redundant systems or networks used in the event of a disaster)

Help desk outsourcing (an outside provider is responsible for any type of phone or electronic response to end-user incidents)

IT security (a service provider performs security-related functions such as security assessments, penetration testing, or managed security services)

Network operations (a service provider is responsible for all or part of data network operations and monitoring)

Web hosting and operations (a service provider hosts, operates, or maintains a corporate website or an e-commerce system)

If your in-house team needs augmentation for any of the listed IT functions, contact us now. We are here to help!

Global popularity of outsourcing could be explained by a combination of factors. Firstly, the amount of work companies are handling day-to-day increases, so they often come up short with in-house staff and need team augmentations. Secondly, the widespread cloud technologies make organizations more willing to give up control of handling their data to third-party companies. Thirdly, it is now easier to invest in public cloud infrastructure as a service (IaaS) and software as a service (SaaS) than to maintain the same in-house infrastructure, and this is what most of the companies do.

Outsourcing is becoming more and more widespread, and the number of companies that resort to the help of either on- or off-shore outsourcers grows. Ukraine has the largest and fastest-growing number of IT professionals in Central and Eastern Europe; its IT engineering force is expected to double to over 200,000 by 2020. Considering the rising popularity of the global trend, IT executives need to continually evaluate the potential of outsourcing to help meet the tactical and strategic objectives of their companies.

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