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January 17, 2024

Pent Up Demand Will See Quality Software Development Firms Thrive in 2024

2023 was a year marked by unprecedented challenges and economic turmoil, forcing businesses to make tough decisions regarding their IT projects.

Many initiatives were put on hold or scaled back as IT budgets were cut and a dearth of venture capital saw the runway shorten for tech companies looking to scale up quickly. 

But in 2024, there’s one positive side effect of that turmoil - a lot of software development work is entering the pipeline with businesses keen to get moving on digital transformation projects and leveraging artificial intelligence to give them a competitive edge.

Businesses are eager to kickstart their digitization efforts and catch up on lost time. This newfound urgency has set the stage for a remarkable transformation of the industry landscape in 2024.

That growth mindset is reflected in the latest results of our survey of software partners around the world, featured in the Accelerance 2024 Global Software Outsourcing Rates and Trends Guide

From Latin America to Southeast Asia, our development partners anticipate strong demand for their services in 2024, with significant deal flow and revenue increases on the cards. This, nevertheless, will be accompanied with continuing uncertainty around inflation, interest rates and geopolitical issues, according to survey respondents.


Sharing the load - how outsourcing can help

Cost efficiency

One significant advantage of outsourcing software development is cost-efficiency. With increasing pressure to deliver projects on time and within budget, organizations are burdened with limited resources. By partnering with an outsourcing provider, you can tap into cost-effective solutions without compromising quality. Outsourcing enables access to labor markets characterized by lower wages and operating costs, resulting in savings for businesses on per hour software developer rates of 20 - 60%. 

Our 2024 Global Software Outsourcing Rates and Trends Guide gives compelling examples of outsourcing savings on development teams numbering 10 - 20 people that can amount to a million dollars or more over the course of a year.


Access to specialized talent

One of the other key attractions of outsourcing is its ability to provide access to a vast pool of specialized talent. As technology continues to evolve at a rapid pace, it becomes increasingly challenging for organizations to keep up with emerging skills and expertise required for cutting-edge projects. 

Software development outsourcing allows your business to leverage expertise not readily available internally. You gain access to highly skilled professionals who possess specialized knowledge and experience in particular domains or technologies. 

Our software partners used the lull in 2023 to upskill and train their staff, particularly in areas of emerging technologies like generative AI. Many of them have developed AI product accelerators to help their customers deploy AI-powered applications and integrate AI into the core of their business.


Faster time-to-market

Another benefit that cannot be overlooked when considering software development outsourcing is its potential contribution towards faster time-to-market. In today's competitive landscape, where speed plays a crucial role in gaining market share, time becomes a precious commodity that must be optimized. 

Outsourcing partners often operate under stringent timelines due to their extensive experience working across multiple clients and industries. This efficiency translates into accelerated project delivery times while maintaining quality standards – helping you stay ahead of your competitors.

By taking advantage of these benefits offered by software development outsourcing - cost-efficiency, access to specialized talent pool, and faster time-to-market - organizations can address the rising demands efficiently while focusing on core activities critical for success.


The year of AI delivery

According to our survey, the area that will attract the most investment of resources from our software development partners in 2024 is artificial intelligence. 2023 saw a bubble of hype emerge around the technology as tools like ChatGPT made obvious the potential of GenAI to transform everything from customer service to office productivity.

2024 will be the year of delivery for AI, where businesses large and small move from experimentation to deployment with intelligent chatbots, AI agents, and large language models (LLMs) processing their organizational data for insights. We will also see the debut of a new generation of domain-specific GenAI platforms, which will offer competitive advantage in healthcare, financial services, and even in the public sector.

This is the beginning of the AI revolution we’ve long been promised. But it could lead to a bottleneck in development as skills shortages and project capacity restraints limit what businesses can handle in-house. It’s therefore time to think carefully about how software outsourcing service providers can be strategically leveraged in 2024 to help you achieve your business goals.


Time to plan for growth with software outsourcing

Careful planning can lead you to avoid longer turnaround times or increased costs as companies compete for development resources in 2024. Here are five things you can do right now to help ensure you have the software development capacity you need in 2024:

  1. Gauge your in-house capability
    The business will no doubt have ambitious goals laid out for 2024. But can the existing in-house team and trusted contractors handle the workload? Do you have sufficient expertise in AI and data science to deliver high-quality products? 
    Knowing the strengths, weaknesses, and gaps in capacity that currently exist in your development team is crucial to understanding what assistance you need to get the work done. 

  2. Define clear objectives and requirements
    Before embarking on a software development outsourcing project, businesses must have a clear understanding of their objectives and requirements. Clearly define the scope of the project, outlining the functionalities and features you expect from the software. Ensure that all stakeholders are on the same page regarding the project's goals and expectations.
    Create comprehensive documentation that includes functional and non-functional requirements, design specifications, and any other relevant details. Providing a detailed project brief will help the outsourcing partner better grasp your vision and deliver a product that aligns with your business needs.

  3. Do your research to identify the right partner
    Selecting the right outsourcing partner is a critical decision that significantly influences the success of the project. Conduct thorough research to identify potential outsourcing vendors with a proven track record in software development. Consider factors such as expertise in your industry, relevant experience, and a portfolio of successful projects.

    Additionally, assess the outsourcing partner's communication skills, cultural compatibility, and ability to adapt to your company's processes. Engage in discussions with potential partners to understand their approach to project management, quality assurance, and client collaboration. A well-chosen outsourcing partner will become an extension of your team, facilitating a smoother collaboration.

    Accelerance specializes in helping you find the right software outsourcing partner. We are constantly vetting software development companies based all over the world, selecting the top 1% to recommend to our customers. 

  4. Establish effective communication channels
    Effective communication is key to the success of any software development outsourcing project. Establish clear and efficient communication channels to bridge any geographical and cultural gaps between your business and the outsourcing partner. Regular updates, status meetings, and project progress reports are essential to maintaining transparency and ensuring that both parties are aligned.

    Utilize collaboration tools, project management platforms, and video conferencing to facilitate communication and keep everyone involved in the project informed. Clearly define communication protocols, expectations, and escalation procedures to address any issues promptly.

  5. Implement robust project management practices
    Successful software development outsourcing projects rely on robust project management practices. Implement a well-defined project management methodology that aligns with the goals of the outsourcing engagement. Agile methodologies, such as Scrum or Kanban, are popular choices for software development projects due to their iterative and collaborative nature.

    Assign a dedicated project manager on both the client and outsourcing sides to oversee the project, manage timelines, and address any challenges that may arise. Regularly review project milestones, assess progress, and be prepared to adapt to changes as the project evolves.

Unlocking the potential of postponed projects

As we look ahead to 2024, the software development outsourcing industry is poised for significant growth. The pent-up demand from IT projects put on hold during economic uncertainties has created a surge in demand that will require careful navigation.

While this presents exciting opportunities for businesses and service providers alike, it also brings its own set of challenges.

As organizations scramble to make up for lost time and catch up on their digital transformation initiatives, there could be a strain on the capacity of service providers. The flurry of interest in AI could exacerbate the problem. This may lead to longer turnaround times or an increase in costs as companies compete for resources.

Furthermore, regional variations may exacerbate these challenges with our surveying of software partners revealing ongoing disruption in Eastern Europe due to the war in Ukraine, and cost pressures in Latin America.

However, amidst these challenges lie lucrative opportunities for those who can adapt effectively. 

Businesses must assess their needs well in advance and engage with reliable service providers early on to mitigate risks associated with delays or resource scarcity. 

By leveraging global talent pools strategically combined with efficient project management methodologies, organizations can navigate through potential hurdles successfully while capitalizing on emerging opportunities brought forth by this surge in demand.

Accelerance can help you set up your software development projects for success by partnering you with quality software development firms offering competitive prices. Get in touch with one of our consultants to talk about starting your outsourcing journey.


Rich Wanden

As Chief Customer Success Officer, Rich oversees Accelerance marketing and sales operations globally with a focus on helping customers make the best decisions for choosing a software development team and working together. Prior to joining Accelerance, Rich has worked in management consulting, IT advisory and...

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