IT Outsourcing Market Size
|Study Period||2018 - 2028|
|Market Size (2023)||USD 585.60 Billion|
|Market Size (2028)||USD 764.63 Billion|
|CAGR (2023 - 2028)||5.48 %|
|Fastest Growing Market||Asia Pacific|
|Largest Market||Asia Pacific|
*Disclaimer: Major Players sorted in no particular order
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IT Outsourcing Market Analysis
The IT Outsourcing Market size is expected to grow from USD 585.60 billion in 2023 to USD 764.63 billion by 2028, at a CAGR of 5.48% during the forecast period (2023-2028).
- Information Technology has become a competitive edge for most of the organization. Moreover, IT outsourcing has become more than a simple cost reduction process with the cloud migrations and options of cloud services. Therefore, this new form is mainly driven by organizational motivations in terms of customer experience, business growth, and competitive disruption.
- The rising adoption of cloud services since the outbreak of COVID-19 is anticipated to build a favorable market scenario for the IT outsourcing market growth as organizations using such services often outsource the maintenance and portion of development work to third parties.
- More importantly, such a rise in preference amongst the newer and even smaller organizations has led the key vendors of the market to increasingly concentrate on driving out a way to integrate the offshore team with the on-site. Another critical aspect driven by small-scale players is the agility in vendor offerings, which refers to the time-to-market.
- Cloud migration and adoption software have led outsourcing customers to divert resources from low-value assets to specialized employees while focusing on more flexible, tailorable, and evolution-friendly solutions.
- However, the lack of data security in cloud and server-based services is hindering the market's growth. Cloud-based services pose many specific security issues and challenges. Data is usually stored with a third-party provider and can be accessed over the internet in the cloud. This indicates that visibility and control over that data are limited. Nevertheless, growing demand for efficiency and scalable infrastructure and increasing cloud migration are driving the market.
IT Outsourcing Market Trends
BFSI to be the Largest End-user Vertical
- Banking, financial services, and insurance (BFSI) is one of the major end-user verticals experiencing significant change in technology adoption, mainly due to the conditions brought on by the pandemic and the evolving competitive landscape. IT spending in the sector is also increasing, according to a study by Flexera Software.
- Financial organizations are increasingly outsourcing their processes and services to third parties. Banks can outsource everything from mailing campaigns to payment processing. Banks can only survive and attract customers with a robust and comprehensive in-house IT department or trusted outside partners.
- The BFSI sector is also shifting towards the cloud, which presents new market opportunities. According to a recent survey by Google Cloud, in the United States, about 54% of the financial services companies using cloud strategy have their workloads fully deployed in the cloud.
- Modern customers need more personalized and streamlined access to banks' services. The transition to omnichannel platforms, which provide seamless access for all devices, can be carried out by IT outsourcers. Moreover, such platforms facilitate real-time data collection and analysis so that financial institutions can improve customers' experience. Hence, such developments are driving IT outsourcing in the banks.
- Overall, the BFSI sector's demand for IT outsourcing services will be fueled by the need for advanced cybersecurity, digital transformation, growing regulatory compliance, and innovative solutions to meet evolving customer expectations and industry trends.
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Asia Pacific is Expected to Dominate the Market
- China has been one of the significant outsourcing destinations. The outsourcing industry considers benefits that the majority of the companies in the US find attractive. Reduction in development costs plays a critical role in retaining the actual benefits of outsourcing.
- China has made significant efforts to transition from (cheap) employment manufacturing to high-end industrial production through digitization and industrialization. China is estimated to account for one-third of the worldwide IIoT market by 2025, according to the GSMA. Additionally, the increasing prevalence of industrial IoT across countries has substantially aided market growth.
- India is a considerable mature global IT outsourcing destination with a vast range of options. Since then, India has worked continuously on this issue for over 25 years to maintain its position as a significant IT outsourcing destination. IT outsourcing companies in the country are rapidly expanding operations worldwide due to an increasing demand for skilled software developers. The cost aspect and talented skill pool have contributed a critical role in ensuring the nation's dominance in the market.
- In Japan, based on recent technological advancements in IT, the scope of IT outsourcing in the country's business sector has expanded to include cloud computing, data protection, and cybersecurity. Owing to the ability to provide business functionality without the need for substantial infrastructure investment, cloud-computing services are increasingly being utilized.
- Overall, the countries in the region are expected to gain significantly in the coming years as the market continues to develop. In addition, the data center buildings in the region have fueled a significant demand. Also, with the data center market on the verge of maturing, significant revenues in upgrading infrastructure have been poised to develop IT outsourcing in the region.
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IT Outsourcing Industry Overview
The IT outsourcing market exhibits significant fragmentation, featuring key industry players such as IBM Corporation, DXC Technologies, Accenture PLC, NTT Corporation, and Infosys Limited. These market participants employ various strategies, such as forming partnerships and pursuing acquisitions, to bolster their product portfolios and establish sustainable competitive advantages.
In May 2023, DXC Technology, a global technology services company, entered into a multi-year agreement with Scuderia Ferrari, the racing division of Ferrari N.V. This collaboration includes a commitment to developing cutting-edge automotive digital solutions with the aim of enhancing vehicle performance and driving experiences. DXC Technology is actively engaged in co-creating unified and scalable digital automotive solutions to enhance vehicle information capabilities in partnership with Ferrari.
In April 2023, WNS Holdings Ltd. unveiled WNS Travogue, a comprehensive suite of digital solutions tailored for the hospitality and travel industry. This innovative suite integrates advanced analytics and technology with WNS Holdings Ltd.'s extensive domain expertise to accelerate growth and foster innovation within the sector.
IT Outsourcing Market Leaders
*Disclaimer: Major Players sorted in no particular order
IT Outsourcing Market News
- May 2023: TDCX officially unveiled its plans for the expansion of its facility in Sao Paulo, Brazil. The company is a leading provider of digital customer experience (CX) solutions for technology and blue-chip enterprises. With the advent of cutting-edge technologies, including generative artificial intelligence (AI), TDCX is poised to revolutionize the CX landscape in various domains. These advancements empower service providers like TDCX to further automate their operations, offer enhanced predictive capabilities through data analysis, and optimize procedures for their valued clients. The decision to expand into Brazil underscores the country's growing appeal as a prime destination for digital customer experience solutions and IT services.
- April 2023: Atos SE made a significant announcement regarding the establishment of three state-of-the-art cloud centers in India (located in Pune and Bangalore) and Poland. These centers are strategically positioned to provide comprehensive support to Atos's customers throughout their entire cloud journey. From facilitating seamless cloud migration to ensuring continuous optimization and accelerating innovation, Atos is committed to safeguarding these processes under a robust cybersecurity framework. The cloud centers are designed to cater to a wide range of business sectors, including healthcare and life sciences, resources and services, financial services and insurance, manufacturing, media and entertainment, public sector and defense, as well as telecom.
IT Outsourcing Market Report - Table of Contents
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.2.1 Growing Demand for Efficiency and Scalable IT Infrastructure
4.2.2 Organization are Increasingly Focusing on IT as a means to Gain Differentiation by Relying on Outsourced Vendors
4.2.3 Ongoing Migration Toward the Cloud and Adoption of Virtualized Infrastructure
4.3 Market Challenges
4.3.1 Fragmented Nature of the Market And Growing Incidence of Data Breaches
4.3.2 Dynamic Needs of IT Structure Impacts the Cost of Customization for End Users
4.4 Impact of COVID-19 on the IT Outsourcing industry
4.5 Industry Attractiveness - Porter's Five Forces Analysis
4.5.1 Threat of New Entrants
4.5.2 Bargaining Power of Buyers
4.5.3 Bargaining Power of Suppliers
4.5.4 Threat of Substitute Products
4.5.5 Intensity of Competitive Rivalry
5. MARKET ANALYSIS
5.1 Trends Related to Onshoring and Offshoring
5.2 Breakdown of Outsourcing Industry - BPO vs IT-based outsourcing
5.3 Impact of the Ongoing Commodification of IT Solutions
5.4 Analysis of IT Outsourcing and Managed Service Industry
5.5 Breakdown of the Major IT outsourcing Segments - Application and Infrastructure
5.6 Impact of Digital Transformation and Emergence of "As-a-Service" Model
6. MARKET SEGMENTATION
6.1 By Organization Size
6.1.1 Small and Medium Enterprises
6.1.2 Large Enterprises
6.2 By End-user Vertical
6.2.3 Media and Telecommunications
6.2.4 Retail and E-commerce
6.2.6 Other End-user verticals
6.3 By Geography
6.3.1 North America
126.96.36.199 United States
188.8.131.52 United Kingdom
184.108.40.206 The Nordics
220.127.116.11 Rest of Europe
18.104.22.168 South Korea
22.214.171.124 Rest of Asia-Pacific
6.3.4 Latin America
126.96.36.199 Rest of Latin America
6.3.5 Middle East and Africa
188.8.131.52 South Africa
184.108.40.206 Rest of Middle East and Africa
7. COMPETITIVE LANDSCAPE
7.1 Company Profiles*
7.1.1 IBM Corporation
7.1.2 DXC Technologies
7.1.3 Accenture PLC
7.1.4 NTT Corporation
7.1.5 Infosys Limited
7.1.6 Tata Consultancy Services
7.1.7 Cognizant Technology Solutions Corporation
7.1.8 Capgemini SE
7.1.9 Wipro Limited
7.1.10 Andela Inc.
7.1.11 Wns Holding Ltd
7.1.12 Pointwest Technologies
7.1.13 ATOS SE
7.1.14 Amadeus IT Group
7.1.15 Specialist Computer Centres (SCC)
7.1.16 HCL Technologies Ltd
8. RELATIVE RANKING ANALYSIS OF THE MAJOR IT OUTSOURCING COMPANIES OPERATING WORLDWIDE
9. MARKET OUTLOOK
IT Outsourcing Market Research FAQs
How big is the IT Outsourcing Market?
The IT Outsourcing Market size is expected to reach USD 585.60 billion in 2023 and grow at a CAGR of 5.48% to reach USD 764.63 billion by 2028.
What is the current IT Outsourcing Market size?
In 2023, the IT Outsourcing Market size is expected to reach USD 585.60 billion.
Who are the key players in IT Outsourcing Market?
IBM Corporation, DXC Technologies, Accenture PLC, NTT Corporation and Infosys Limited are the major companies operating in the IT Outsourcing Market.
Which is the fastest growing region in IT Outsourcing Market?
Asia Pacific is estimated to grow at the highest CAGR over the forecast period (2023-2028).
Which region has the biggest share in IT Outsourcing Market?
In 2023, the Asia Pacific accounts for the largest market share in IT Outsourcing Market.
IT Outsourcing Industry Report
Statistics for the 2023 IT Outsourcing market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. IT Outsourcing analysis includes a market forecast outlook to for 2023 to 2028 and historical overview. Get a sample of this industry analysis as a free report PDF download.