The software development outsourcing landscape is evolving fast in 2024. This article cuts through the noise to bring you the 9 most important trends and statistics. Whether you’re eyeing to scale your business, reduce expenses, or access elite global talent, these insights are your key to unlocking the full potential of outsourcing.
Software Development Outsourcing Trends & Statistics in a Nutshell
Let’s start with a quick overview of the top 9 trends and statistics in software development outsourcing.
| Trend | Types of Projects Affected | Supporting Stats |
| Surge in Demand for Cloud Computing | Cloud storage, web apps, and infrastructure projects. | “Cloud market to reach $947.3 billion by 2026” – MarketsandMarkets |
| Rise of AI & Machine Learning Projects | Data analysis, automation, and AI-based app development. | “AI market to hit $126 billion by 2025” – Statista |
| Increased Focus on Cybersecurity | Security software, threat analysis, and compliance projects. | “Cybersecurity market to grow to $345 billion by 2026” – MarketsandMarkets |
| Growth in Remote & Hybrid Work Models | Collaboration tools and remote team management software. | “65% increase in remote work in the next 5 years” – Upwork |
| Popularity of Agile & Scrum | Projects needing quick adaptation, like mobile apps and eCommerce sites. | “71% of companies use Agile” – Digital.ai |
| Emphasis on Cost-Effectiveness | High-quality development projects, including web development and SaaS platforms, at lower costs. | “Companies that outsource to the Philippines can cut labor costs by 70%” – OutsourceAccelerator |
| The Rise of Nearshoring | Projects requiring closer cultural ties and time zone alignment, like customer service apps and local market apps. | “The number of foreign companies hiring from Latin America increased by 156%” – Bloomberg |
| Expansion of Blockchain Technology Projects | Cryptocurrency, smart contracts, and secure transaction systems. | “Blockchain market to reach $94 billion by the end of 2027” – MarketsandMarkets |
| Increased Use of Project Management Tools | Projects that benefit from streamlined communication and task management, like large-scale software deployments. | “77% of high performing projects use project management software” – PwC |
What does this trend mean for you and your business? Let’s explore them closer.
1. Surge in Demand for Cloud Computing
Cloud computing lets you work together easily, share data quickly, and get to your files from anywhere, making it easier to grow your business. It facilitates global hiring and effortless document sharing which reduces operational costs and geographical limitations.
What it means for business owners
Use cloud services like AWS or Azure to grow without large upfront investments. It allows easy expansion into new markets by adjusting resources based on demands. This reduces costs and enhances global competitiveness at the same time.
What it means for software developers
Software developers need to focus on building cloud-native applications that can handle different tasks, recover quickly from problems, and are user-friendly. They also need to learn new technologies like Docker and Kubernetes to deploy and manage these programs efficiently.
What it means for outsourcing teams
Outsourcing teams need to deepen their expertise in cloud technologies to meet the growing demand. Offering cloud migration services and managing cloud infrastructure for clients will open new revenue streams and partnerships.
2. Rise of AI & Machine Learning Projects
AI and machine learning create intelligent systems that operate autonomously, efficiently analyzing large datasets to enhance decision-making for your business. These technologies streamline processes to deliver faster and more intelligent outcomes without incurring additional expenses.
What it means for business owners
It enhances decision-making by boosting accuracy and minimizing errors in operations. These technologies simplify analyzing large datasets and expediting customer support using tools like chatbots. Employees can then allocate time to more pressing tasks.
What it means for software developers
Developers should excel in using AI and machine learning tools like TensorFlow and PyTorch. Mastering these tools improves user experiences, making them more personalized and efficient.
What it means for outsourcing teams
Outsourcing teams should excel in AI and machine learning to meet the increasing demand for such projects. They should make strategic investments in training to empower their teams with the latest skills, ensuring the delivery of high-quality AI solutions to clients.
3. Increased Focus on Cybersecurity
Over 5 billion people are online globally, pushing businesses to operate online and adopt new technologies. But this increase in digital activity also means more cyber attacks, causing financial losses. To protect themselves, many businesses invest in cybersecurity.
What it means for business owners
You need to make sure that your online data is safe from breaches. This means using encryption and multi-factor authentication. This protects the business and makes your customers feel safe. Check website security regularly to find and fix any problems quickly.
What it means for software developers
Developers should prioritize the security of the software they create to safeguard it against cyber attacks. This involves writing secure code, regularly updating software with the latest security features, and thoroughly testing developed software to identify and address any weak points.
What it means for outsourcing teams
Outsourcing teams should offer the latest and most reliable cybersecurity services to businesses. This can range from providing security assessments and compliance services to deploying and managing advanced security solutions for clients.
4. Growth in Remote & Hybrid Work Models
Companies are adopting remote or hybrid work setups, combining home and office work. This shift allows businesses to access the best talent from anywhere.
What it means for business owners
Leverage remote or hybrid work setups to hire experts from around the world to save on overhead and office space costs. Project management tools like Asana or Trello will help in efficiently managing teams in different places.
What it means for software developers
Developers should master using Slack or Microsoft Teams to communicate and share information, especially when working with dispersed teams. These tools streamline conversations and updates, ensuring everyone stays on the same page regardless of their physical location.
What it means for outsourcing teams
This means outsourcing teams can tap into a wider pool of global talent and adopt flexible working arrangements to cater to more clients.
5. Popularity of Agile & Scrum
Agile and Scrum are project management approaches that help teams make changes quickly based on customer preferences. These methods help keep businesses flexible and responsive to customers’ needs.
What it means for business owners
This allows you to create better products and happier customers. For example, using a sprint-based approach helps you make quick changes to the business process based on what users or customers tell you.
What it means for software developers
This allows developers to engage more directly with clients and stakeholders, where they can understand end-user needs more deeply and ultimately create more user-centered software solutions.
What it means for outsourcing teams
Outsourcing teams can operate more transparently and responsively, so they can align closely with client expectations and deliver higher-quality results in a shorter timeframe. Having certified Scrum Masters and Agile coaches makes outsourcing teams even more appealing to clients who want to use these methods.
6. Emphasis on Cost-Effectiveness
Companies are zeroing in on cost-effective software outsourcing in 2024. They want to cut costs without cutting corners by tapping into global talent and tech advances.
What it means for business owners
This focus on cost-effectiveness allows you to stretch your budget further, investing in outsourcing services that deliver high-quality software solutions without breaking the bank.
To maximize ROI, recruit from places like the Philippines where Labor costs are low but talent availability is high.
What it means for software developers
Software developers need to optimize their development processes, leveraging tools and methodologies that let them deliver top-notch but affordable software solutions. They should also improve their skills in creating value-driven software so they can produce exceptional work without excessive cost to meet the demands of budget-conscious clients.
What it means for outsourcing teams
Outsourcing teams to streamline their project management and development processes, focusing on productivity and minimizing waste to offer better rates without sacrificing quality.
7. The Rise of Nearshoring
Companies are turning to nearshoring – hiring software developers from neighboring countries for easier collaboration and quicker responses. This approach minimizes challenges related to time zones and cultural gaps.
What it means for business owners
Nearshoring makes it easier to communicate with your chosen outsourcing team compared to offshoring. It makes collaboration smoother and project completion faster. You can benefit from the blend of cost savings and convenience.
What it means for software developers
The rise of nearshoring opens up new job opportunities with international companies while allowing them to work in time zones and cultural environments similar to their own.
What it means for outsourcing teams
It increases the demand for their services from businesses looking for closer collaboration and cultural alignment. This means growth opportunities and potentially more stable, long-term partnerships.
8. Expansion of Blockchain Technology Projects
Blockchain is a secure, decentralized technology that records transactions across multiple computers, making sure that each entry is unchangeable and transparent. It offers a new level of security and trust in digital transactions.
What it means for business owners
You can use blockchain for secure and transparent transactions, smart contracts, and to improve supply chain visibility. Integrating blockchain can offer competitive advantages in trust and efficiency, especially in sectors like finance and logistics.
What it means for software developers
Developers need to master skills in blockchain platforms and smart contract development to contribute to these projects. Understanding the principles of decentralized applications (DApps) and consensus algorithms helps build secure and efficient blockchain solutions.
What it means for outsourcing teams
The growing demand for blockchain technology projects opens the door to diving into a niche market, where they can develop expertise and provide high-value services in decentralized applications and smart contracts.
9. Increased Use of Project Management Tools
More companies are using project management tools to plan and track tasks. This helps teams stay organized and work better together, especially when employees are working remotely.
What it means for business owners
Business owners can use project management tools like Jira or Monday.com to efficiently oversee and track the outsourced project’s progress. This improves timely delivery and effective communication with remote teams.
What it means for software developers
Developers should master using project management tools to make it easier to plan, keep track of tasks, and accomplish development milestones.
What it means for outsourcing teams
Outsourcing teams can better organize, track, and deliver their projects to enhance collaboration and transparency with clients. Additionally, this lets them hone their skills in creating these tools, allowing them to develop and market their own versions.
What’s Next: Software Outsourcing Trends After 2024
As we initially pointed out, software outsourcing evolves fast, a momentum that is expected to carry on and gain speed beyond this year. Here’s what you should watch out for.
I. Technology Adoption & Innovation
AI & Automation Expansion
By 2025, machines will perform more than 50% of all current workplace tasks. This will make it faster and cheaper to create software.
Blockchain Beyond Cryptocurrency
The business value blockchain adds is expected to increase to over 360% by 2026 and surpass 3,100% by 2030. This hints at a future where secure, transparent transactions become the norm.
Quantum Computing Impact
Around 2029, a new kind of super-powerful computer called quantum computing will change how teams work on software projects. It will simplify solving tough problems and more people will need to learn how to use it.
II. Geographical & Market Shifts
Rise of African Outsourcing
Africa’s revenue is projected to grow at an annual rate of 12.80% from 2024 to 2028, reaching a market volume of US$16.58 billion by 2028. The younger African demographic is driving this change by mastering the use of technology and enhancing infrastructures.
Nearshoring Over Offshoring
By 2025, nearshoring will see a 92% increase as businesses prefer outsourcing within their region to mitigate risks and improve collaboration, highlighting the growing importance of geographical proximity.
III. Operational & Engagement Models
Partnership Models Prevail
Outsourcing contracts will be based on strategic partnership models, focusing on innovation and long-term value rather than just cost-saving measures.
Outcome-Based Contracts
By 2025, 50% of contracts will be based on outcomes. If things go well, they both get rewarded; if not, they share the challenges.
IV. Security, Compliance, & Trust
Enhanced Security Protocols
To stay safe from online threats, companies will spend more on tighter security, including AI-driven threat detection and blockchain for data integrity.
Data Privacy Regulations Compliance
Compliance with international data privacy regulations (e.g., GDPR, CCPA) will become a mandatory requirement for outsourcing providers.
V. Workforce Dynamics & Remote Collaboration
Remote Collaboration Technologies
Investment in remote collaboration tools will increase to 50% by 2026, with a focus on enhancing communication, project management, and productivity for distributed teams.
Cultural & Language Training
The online language learning market is projected to grow by 20.8% annually during the forecast period 2023-2030, reaching $38.7 billion by 2030.
Conclusion
If you’re planning to adapt these methods, start by securing your data to avoid any future cyber threats and for a smooth sailing transition.
FAQs
1. What are the trends in software development outsourcing in 2024?
The following are 5 of the known trends in software development outsourcing:
- Increased nearshore outsourcing
- Development of blockchain
- AI and Machine learning
- Development of the cloud-based system
- Development of the Agile method
2. What are the technologies commonly outsourced in software development?
Many technologies are commonly outsourced in software development to incorporate specialized work and resources. 3 of them are:
- Web Development: HTML, CSS, and JavaScript.
- Mobile Application Development: Swift, Objective-C, Kotlin, and Java.
- Cloud Computing: Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP).
3. What challenges do companies face when outsourcing software development?
Although outsourcing software development offers many benefits, it also has some major challenges including:
- Having teams in different places causes communication barriers and difficulties in collaborating real-time.
- Issues in data protection arise from sharing some sensitive data.
- Finding a credible and reliable outsourcing partner is time-consuming.
4. What are the security measures in software development outsourcing?
Here are 3 of the key security measures implemented in software development outsourcing:
- Conducting regular usage testing to identify and address errors in the system.
- Having data backups to prevent data loss in cases such as cyber-attacks, corruption, or accidental deleting.
- Having security training to raise awareness on best practices to avoid cyber threats.
