Insights | Fast Forward to 2022: Five Software Outsourcing Trends to Watch

Fast Forward to 2022: Five Software Outsourcing Trends to Watch

By Lisa Morrell | December 7, 2021

In the aftermath of the pandemic crisis, software development outsourcing proved its worth. Its flexibility helped companies reduce overhead and scale resources to achieve the quick cutbacks and efficiencies that were required to ride out unprecedented business uncertainty.

Outsourcing, in general, demonstrated its value as an effective contributor to long-term business resiliency, and software outsourcing earned a strategic role in digital innovation. Those wins highlighted the need and rationale for smart outsourcing strategies and partners beyond the pandemic. 

So it’s no wonder that global software outsourcing is accelerating. The outlook is strong: Software application development remains the most frequently outsourced function among IT’s dozen sectors. A growing majority of companies - 60% in 2021, compared to 56% the year before - currently outsource at least part of their application development, according to Statista research. Software outsourcing is on a 10-year record growth trajectory through at least 2025.

Looking ahead to 2022, the businesses whose IT models allowed them to pivot quickly in the last year are better positioned to meet both new opportunities and challenges. They’re bringing greater levels of adaptability into the year ahead. 

Among our clients and our worldwide software development network, we’ve seen an increased capacity and resiliency to meet the coming year’s agenda. Industry leaders are ready to tackle trends such as the severe talent gap, digital transformation acceleration and distributed work cultures. 

Check out our picks for the “top five” trends to watch in 2022 software development outsourcing.

 

Skills Threat

1. The Growing Tech Skills Shortage

Technology will continue to drive digital change across all industries. But there is no end in sight for the chronic tech talent shortage, with approximately one million unfilled software development roles in the US - and growing.

The supply-demand mismatch means recruiting developers is more difficult, lengthy and expensive. The average salary across software development roles is now $114,487. We saw US onshore developer rates jump by a staggering 20% to 50%  in 2021. The Great Resignation is impacting tech workers, who are re-evaluating their priorities and switching jobs in great numbers.

Organizations big and small are desperate for talent. Problems finding adequate skilled developers are disrupting their digital transformation plans and hindering the adoption of emerging technologies.  

However, there is a workaround to the scarcity of IT engineering talent. Distributed resourcing in the form of outsourced development teams is a solution that more organizations are adopting thanks to the rise of flexible work practices following the pandemic.

Key outsourcing regions that Accelerance operates in, including Colombia, Costa Rica and Poland, are experiencing a rush in demand. Accelerance’s relationships, through our world’s largest certified global software outsourcing network, allow us to provide the necessary skills that IT leaders need to meet their business and technology objectives.

Tapping deep global talent pools lets you source software teams in weeks rather than months at significantly lower rates than onshore costs. Outsourcing addresses the tech talent crunch by quickly filling team gaps in critical high-demand positions such as back end, full stack and front end engineers.

IT leaders will face real challenges in 2022 finding and integrating software teams for trending initiatives such as cloud-based services, security, artificial intelligence, DevOps, data science and analytics. Outsourcing with the right partner will help solve this challenge by opening up a new world of resourcing options. An experienced outsourcing advisor like Accelerance can help find specialized partners to quickly and easily close any technical skills gap.

 

Acceleration

2. Acceleration of Digital Transformation

The trend in IT spending over the last two years has been clear. After a sharp dip as the pandemic engulfed the world, spending bounced back in a big way driven by businesses and government agencies going digital in a big way.

More than 80% of companies are moving quickly on development initiatives to make their businesses more innovative, more resilient and more competitive, according to Gartner’s 2021 CIO Agenda.

All facets of tech staffing become more complex as you move further along the digital maturity curve. Few if any IT departments will be able to keep pace with all the latest technology skills. 

So, it's no surprise that 64% of IT executives say they need outside expertise for digital transformation initiatives. They're open to alternative talent sources, such as the on-demand outsourcing network pioneered by Accelerance. Over two decades, we've honed this proven approach to power the rapid release of quality innovative software for our clients, giving access to pre-vetted software companies ready to resource development teams with the right digital skills at the right time. The right outsourcing partner can help your company move fast on ambitious digital transformation initiatives - through strategic, disruptive outsourcing.

Specialist developers in cloud computing, robotic process automation, artificial intelligence and other emerging technologies are in hot demand. IT leaders’ innovation focus was side-lined for several months following the disruption of the pandemic in Spring 2020 as they grappled with survival issues such as business continuity, security risk, product volume, and workforce adjustments. Many companies parked their innovation programs and looked to outsourcing to reduce cost and optimize productivity. 

As the survival imperative eases, organizations are refocusing on digital innovation plans. They're balancing the need to invest in advanced technologies with making continued use of the operational efficiencies that outsourcing delivers. Either way, software development outsourcing will continue to be in strong demand for both innovation and efficiency gains.

 

Cybersecurity

3. Outsourcing for a Winning Cyber Defense

Major ransomware incidents, such as the attack on Colonial Pipeline, caused severe disruption in 2021. The threat to critical infrastructure posed by ransomware and a new wave of denial of service (DDoS) attacks, some of them deemed to be state-sponsored, spurred President Biden to convene two major White House cybersecurity summits during 2021, one of them involving 40 nations. 

The message at those meetings was clear: Governments and companies alike must do more to meet the evolving cybersecurity threats that have only been exacerbated by the move to remote working, where millions of people are connecting to the internet over unsecured home networks.

There is now the firm prospect of tougher cybersecurity legislation coming in 2022, which could require greater compliance from organizations, particularly those working with public sector agencies. 

Our deep understanding of the tech talent market showed us that the skills shortage was particularly acute when it comes to cybersecurity. Many companies struggle to find the right security professionals to stay on top of the cyber threat landscape. They are turning to trusted outsourcing partners like Accelerance for assistance.

That’s why we've established our Cybersecurity and Compliance Practice. Our highly-experienced cybersecurity team can help you build, enhance or evolve your security and compliance programs, identifying current gaps, putting in place remediation plans and benchmarking your security status to enable ongoing monitoring. Through our partner network, we can find the exact specialist cybersecurity skills to meet your individual needs, whether you are a major bank, an online store or a software start-up. Add something about the cyber skills crisis.

We expect cybersecurity to be one of the fastest-growing parts of our business in 2022. A record number of organizations will look to outsource partners to help to protect their networks, assets and employees against growing threats and attacks.

 

Remote

4. The New Reality of Remote Work

With so many people forced to work virtually since the start of the pandemic, the practice of remote working has been normalized. Most large tech companies have now settled on a hybrid working model that over the long term will see employees split their work week between home and the office to some degree.

Corporate America has also become far more willing to embrace offsite resourcing and is increasingly comfortable managing dispersed teams. This transition in working norms sets the stage for even greater acceptance of nearshore and offshore outsourcing in 2022.

Quality outsourcing firms are already remote work experts. They’ve mastered the capacity, stability and compliance requirements to serve clients’ needs from afar.

Remote work is no passing trend because employees are demanding it. The benefits for them include feeling less stressed and more productive. They can be more efficient and enjoy better work-life balance due to reduced commuting time. Lower staff turnover, reduced office overhead and increased access to wider talent pools are other positive spin-offs from remote working.

This new operating model applies just as equally to outsourcing software development teams. In 2022, we will see our partners accommodate remote and hybrid working to an even greater degree, accruing all the benefits discussed above as a result.

 

Partnership

5. Next-Level Partnership Management

We’ve heard about “co-sourcing” and building “value networks” for years now. But more complex software development initiatives are creating higher stakes and, in the process, demanding new client-partner relationships. 

In 2022, that trend will manifest itself in four key ways:

  • More thorough due diligence: There will be a greater focus on tighter risk management, which will drive the need to spend more time and precision in partner qualification. One solution is to make use of a value network of pre-vetted partners, a model pioneered by Accelerance through our global network of several hundred software firms certified after months of assessment based on 500-plus criteria and on-site visits. 

  • Careful partner selection: The need to undertake rigorous partner selection is at odds with speed to market pressure. That’s not going to change in 2022. An outsourcing advisory firm like Accelerance can help through our proprietary partner matching process, Rapid Referral®, that quickly provides a list of potential partners with the right expertise and fit. It's your best bet for a timely and successful partnership. 

  • Meticulous contracting: The need for more controlled agile outsourcing relationships is changing the nature of outsourcing contracts. Companies are sharing more risk with outsourcing partners looking for greater flexibility in terms and moving more toward an outcomes focus. In 2022, you’ll want your work to be underpinned by water-tight contracts. Plan to conduct more frequent benchmarking and updating of SLAs, ideally at least once a year.

  • Proactive governance: The explosion in outsourcing for new technology competencies demands improved governance and project control. From our 20+ years of experience onboarding and managing outsourcing teams, we foresee a need in 2022 and beyond for more systematized structures for overseeing software product development roles, communications, risk management, issue resolution and performance measurement.

Make outsourcing work for you in 2022

Software development outsourcing took a bold leap in 2021, driven by the pandemic. This elevated stature means it will play a key role in 2022. It will present opportunities for businesses to accelerate digital initiatives and transformation. 

Software outsourcing engagements will become more multi-layered with higher degrees of technical specialization than ever. Keeping up with industry trends, such as those discussed above, will be no easy feat with the rising pace of change. 

A trusted advisor such as Accelerance can help you navigate a more complex technology and outsourcing landscape. With 20+ years of experience, we’re on top of the latest market developments and can connect you with the most informed development partners the world has to offer. Let us help you make the most of software development outsourcing for your tech strategy in 2022.

 


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