IT outsourcing trends for 2024

When the world effectively shut down in 2020, many companies were left in trouble: with physical stores closing, how can they keep their services running? Those that have been successful have been able to digitize quickly, often with the help of IT outsourcing services.

IT Outsourcing Services Mordor Intelligence LLP “The global IT outsourcing market… was valued at US$526.6 billion in 2021 and is expected to reach US$682.3 billion in 2027.”

Some trends that have emerged in recent years are starting to fade in 2022. They include pricing flexibility, which was popular during the pandemic period. IT service providers were willing to lower their prices to ensure their customers got what they needed, and the volume of work received during this period partly offset the lower rates. However, as things return to a normal state, these same suppliers are unable to maintain lower prices.

Another trend that is slowing down is massive migrations to the cloud. Although, as described above, companies are still moving to the cloud, many of those that planned to make the move have already done so, and the next phase of their IT operations is more about increasing efficiency in specific cloud-based functions. Therefore, cloud migration commitments will likely become shorter and less involved.

A vendor's comprehensive IT services may also be in decline. IT companies are moving towards specialization, so it is becoming increasingly rare for one company to provide the full range of services. Therefore, companies that want to hire IT support can look for different companies to meet all their needs. The good news is that these companies are forming partnerships, which means IT customers can benefit from trusted references.

2022 saw the end of the race to send employees home to maintain health standards, which began in 2020 alongside the COVID-19 pandemic. As many companies bring team members back to the office they are finding less need to provide IT services to remote workers.

IT teams are starting to move away from the service level agreement (SLA) model and looking to outsource service providers to add more value than just meeting key performance indicators (KPIs). The experience level agreement (XLA) is a concept that is emerging from this shift. It includes not just how systems are working on the back end, but how team members are experiencing the technology they are using and how effective it makes them.

What to look for in the future

Changes in the way companies do business, as well as political and economic forces, will change the role of IT outsourcing in the coming years.

As digital solutions become more intrinsically integrated into business operations and capable IT professionals are hard to find, IT outsourcing is becoming more critical. As such, the relationships that organizations maintain with their IT providers are becoming increasingly important. Furthermore, in the coming years, outsourcing service providers will no longer be just commoditized services, but will be long-term partners to help companies drive growth, improve the customer experience and create a competitive advantage.

As companies demand greater customization of systems and solutions, they are willing to return value to IT outsourcing organizations in different ways. One of them is gainsharing, where IT subcontractors are being compensated to reflect their participation. Such a strategy may involve an agreement for higher costs than what companies have paid.

The IT professional shortage is very real, and companies must pay dearly to maintain the highest quality IT outsourcing providers' services. This investment by companies will ensure that they obtain the services and solutions they need to grow and advance their businesses.

Another trend that will continue into 2024 is the fallout from Russia's brutal invasion of Ukraine, which is one of the world's leading technology hubs and a leading provider of IT services. The disruption that occurs there will likely continue to have a negative impact on these services and, consequently, on the ability of companies around the world to access these services. In the worst case scenario, other countries that provide these services could be similarly affected.

The metaverse is still a nascent technology. However, as a way for companies to interact with customers and potential customers, it is quickly gaining traction. Savvy organizations want to take advantage of this excellent exposure and promotion opportunity. These companies need IT assistance to bring their ideas to life. As the metaverse expands, demand for these services will also increase. The following video demonstrates the technology that currently allows users to interact with the metaverse.

How to find the best IT outsourcing service for your company

Finding a good outsourcing company can take a bit of research, so start as soon as you know it's something you want to pursue. First, think about what you need from an outsourced IT provider. Questions you can ask yourself and other leaders include: What problems do we need to solve? What types of provider attributes are important to us, such as location, time zone, and language? And how much are we willing to spend?

Ask colleagues for references of outsourcing providers they like and trust. Start a list of potential vendors and include their names, contact information, experience, and anything else you know about them upfront. Then do an online search for suppliers that meet your criteria, including those close to your location if that's important to you, price and areas of expertise. Add any promising possibilities to your list.

An additional way to find potential vendors is to conduct online searches in the areas in which you need help. For example, you can research how to build a custom CMS solution. Many IT outsourcing providers and software development companies have blogs and are likely to appear in these searches. If the blog posts or other resources look promising, the company likely knows what it does in this area.

Another way to find potential suppliers is to search online marketplaces like Clutch, which allows you to compare suppliers on a variety of variables such as location, reviews, and focus. Add any potential suppliers to your list.

To narrow down your choices, carefully review the websites of each provider on your list. If you see something that looks particularly promising or is a deal breaker, write it down on your list. For example, you may need a specific service but don't see it listed on a provider's website. If the vendor seems great, you might want to contact them just to make sure, but that's likely to be a deal breaker.

Be sure to think about things that are outside the technical realm, like what level of service you can expect, how they choose their engineers, and what type of contract you will be expected to sign.

Once your list has been narrowed down to three to five possible suppliers, arrange to meet with representatives from those companies. Take the opportunity to have them describe their services and present any demonstrations they have prepared. Also, ask them any questions you may have. From there, you can make your final decision and move forward with the new relationship.

What is the future of IT outsourcing?

The future of IT outsourcing will likely see an increased focus on security, the challenges of attracting and retaining top talent, the demand for cloud-based technology, the growth of artificial intelligence and automation, and more globalization. Companies that want to leverage highly useful and necessary outsourced IT resources should start now to find a partner they can trust to build the IT infrastructure needed to support current projects and those that will emerge as they grow.