IT Outsourcing


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IT Outsourcing: The Technical Trends for 2023

There is a wave of transformative technical trends within the realm of IT outsourcing in 2023. The main reason for this change is due to the effects of the pandemic and the economic recession. In this era of rapid digitalization, businesses are turning to outsourcing services to streamline operations, promote innovation, and stay ahead of the competition.

So, in this exploration, Protean Studios delves into the transformative tech trends shaping outsourcing this year. We will provide valuable insights for businesses and industry stakeholders to understand this dynamic and ever-evolving landscape.

I. About IT Outsourcing

Outsourcing is the practice in which a company engages another entity to perform its operations. Businesses can outsource a variety of IT tasks. It includes web/app software development, web hosting, application maintenance, and IT support services from external providers.

There are three types of IT outsourcing that are based on the service provider’s location.

  • Offshore Outsourcing: The service provider operates from a different country, often benefiting from lower labor costs.

  • Onshore Outsourcing: It operates within the same country as the client organization. And ensuring closer collaboration and a similar business culture.

  • Nearshore Outsourcing: The service provider resides in a neighboring or nearby country. So, it allows for geographical proximity and potential cost advantages.

Nowadays, companies opt for outsourcing services to reduce operational costs and access specialized skills and expertise. Especially accelerating project timelines, improving service quality, and staying competitive. Thus, in-house teams focus on core business functions.

II. The technical trend of IT outsourcing services

In the digital landscape of IT outsourcing services, staying abreast of evolving technological trends is crucial to remaining competitive and delivering high-quality solutions. Below are some technical trends that many countries are trying to improve to catch these changes.

1. Blockchain

One major trend in IT outsourcing is the adoption of blockchain technology in different software each year. Spending on developing solutions using blockchain is projected to increase from 6.6 billion dollars to 19 billion by 2024. While FinTech leads in blockchain usage, other fields also apply it. For example, IT, logistics, real estate, healthcare, and various other industries.

Blockchain technology is a common trend
Blockchain technology is a common trend

Blockchain is a special kind of technology that keeps a secure record of transactions across many computers. It works in a way that's open and not controlled by a single entity. Once the blockchain records something, it becomes unchangeable. This way of working provides trust and safety for important documents.

2. Internet of Things (IoT)

The IoT is a network of physical objects connected through built-in sensors and software. In technology outsourcing trends, many fields apply the Internet of Things, such as the following:

  • Smart home solutions

  • Cargo tracking

  • Monitoring container conditions

  • Biomedical sensors

  • Security services

  • Enhancements in navigation

Also, IoT generates vast amounts of data. When analyzed, IoT can offer valuable insights for businesses, aiding informed decision-making in outsourcing strategies.

3. Automation

The third entry in the 2023 IT outsourcing trends is automation. "Automation technology" encompasses a set of processes and machinery enabling systems to operate autonomously, encompassing machines, apparatus, equipment, and various devices.

Automation - A technical trend in 2023
Automation - A technical trend in 2023

It includes robotic process automation (RPA) and the integration of AI. Automation enhances efficiency, minimizes errors, and optimizes resource use, leading to cost savings and improved productivity across various industries and functions within IT outsourcing.

4. Artificial Intelligence (AI)

The AI industry has seen huge growth in recent years. This is a reason why it will be a major trend in IT outsourcing in 2023. AI-powered tools can help businesses enhance customer experiences, business operations, and reduce costs. Additionally, AI provides better control over data and processes. So it enables seamless integration across all aspects of operations.

Businesses are investing in AI technology to handle and analyze large volumes of data for improved user experiences. Instead of creating their own AI tools and strategies, many companies opt to source services from specialized vendors.

These are technical trend in 2023, you can read more about the common trend in the IT outsourcing market: The Trend Of IT Outsourcing In The 2023 Economic Recession

III. The trend for IT function outsourcing

The trend for IT function outsourcing also changes in the year during some common fields like cloud, embedded system, e-commerce, etc.

1. Cloud Solutions

This trend comes from the need to keep up with fast-changing technology and make the most of what cloud computing offers. Outsourcing cloud services saves a lot of money because it cuts down on the costs associated with setting up and maintaining in-house computer systems.

It empowers businesses to collect, store, and use resources and services based on the cloud. As a result, a growing number of companies have adopted cloud technology. According to Statista in 2022, it reports that over 60% of enterprise data used store methods in the cloud. They expect this upward trend to persist into 2023.

Cloud Solutions with more advantages
Cloud Solutions with more advantages

Cloud solutions come in several types, each catering to specific needs and functionalities:

  • Infrastructure as a Service (IaaS): It provides virtualized computing resources over the internet. This service includes virtual machines, storage, and networking components. Users have control over their operating systems, applications, and data, while the cloud provider manages the infrastructure.

  • Platform as a Service (PaaS): Offers a platform and environment for developers to build, deploy, and manage applications without dealing with the underlying infrastructure. It includes tools, frameworks, and runtime environments, streamlining the development process.

  • Software as a Service (SaaS): delivers software applications through the internet on a subscription basis. Users can access and use these applications, without the need for installation or maintenance. Examples include email services, office suites, and customer relationship management (CRM) systems.

  • Function as a Service (FaaS): This allows developers to run code in response to events without managing servers. The cloud provider handles scaling, execution, and resource allocation.

2. Embedded System Programming

Outsourcing embedded system programming is becoming prevalent due to the complexity and specialized skills required in this field. This is the process of designing and coding software for embedded systems. Specialized computing systems, known as embedded systems, dedicate themselves. The goal is to perform particular tasks within larger devices or machines.

They consist of a microcontroller or microprocessor to carry out a set of functions. Nowadays, the program is used in some common fields like printing, OTO, chips, medical devices, automation, etc.

3. E-commerce and Trading Automation

The online trading market is getting bigger and can reach a whopping 8.1 trillion dollars by 2026, a significant jump from 5.7 trillion in 2022. This surge is because more and more people have been shopping online, especially since the COVID-19 pandemic breakout. Due to this trend, there's a growing interest in IT outsourcing services to build online marketplaces. They start developing retail software and come up with efficient logistics solutions for deliveries.

IV. How will IT outsourcing trends in 2023 impact business operations?

In 2023, IT outsourcing trends are reshaping business operations. Cloud adoption boosts flexibility and collaboration, while cybersecurity outsourcing enhances protection. AI, machine learning, and RPA optimize decision-making and efficiency. Edge computing and IoT outsourcing speed up data processing and connectivity. Hybrid work models and remote IT talent foster flexibility and diverse skill sets.

These trends offer businesses opportunities to innovate, improve customer experiences, and streamline operations. Besides, it also helps drive growth for many businesses by saving on costs and operational activities.

As you can see, understanding the tech trends in IT outsourcing is crucial. These trends are game-changers, they offer growth, efficiency, and innovation opportunities for companies. If you want to know more about these trends as well as the IT market, please contact us to consult. Our team will answer any of your questions and give clients useful solutions.