Market Trends of IT Outsourcing Industry
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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