IT Outsourcing Trends 2024: Expectations and Challenges
Slava Khristich
Vlad Nazarov
Why is it crucial for American businesses to stay ahead of the IT outsourcing trends? It’s about making informed decisions, fine-tuning IT strategies, and selecting the right outsourcing partners to enhance their ROI and deliver top-notch tech products.
This article will explore emerging practices and industry shifts in offshore and nearshore software development, offering the insights necessary for a successful future in IT outsourcing. Join us as we explore what lies ahead…
IT service outsourcing, propelled by advancements in Internet technology, is transcending language and cultural barriers, marking one of the most significant social economy achievements in the past two decades. It’s a transformative force, enabling global collaboration by connecting businesses with a worldwide talent pool.
| ? At TATEEDA, we have extensive experience in this arena, having assembled outsourcing teams for numerous American enterprises, including a leading travel nurse provider in the U.S., Travel Nurse Healthcare (name protected by NDA). Our efforts have empowered them to save up to 30-40% on their IT innovation budget, leveraging our offshore R&D unit in Ukraine and resources in LATAM to bring high-quality, cost-effective solutions to the forefront of their operations. If you require an estimation for your project please contact us today → |
The trends of outsourcing are steering towards a nuanced strategy:
- Seeking Deeper Expertise Over Cost: There’s a significant shift from the hunt for the cheapest offers to a deeper appreciation for partners who provide substantial expertise and quality. Businesses are now valuing partners with specialized skills in technologies and frameworks, such as custom C#/.NET development or biotech IT system customization, more than ever.
- Embracing a Spectrum of Partners: Companies are increasingly opting to work with an array of vendors on a single project, aiming to curate the perfect blend of talents and capabilities.
- Spotlight on New Tech Hubs: The spotlight is turning towards nearshore developers from LATAM and Eastern Europe, marking these regions as epicenters of IT outsourcing talent.
- High Demand for Niche Experts: The rise of advanced cloud platforms from leading corporations like Amazon and Google has fueled the demand for specialists in niche technologies. This is a significant driver behind software development outsourcing trends, where there’s a growing need for experts like AI/ML system developers and custom telehealth app developers.
Table of Contents
The Top 6 Emerging Technology Trends in IT Outsourcing
Exploring the offshoring trends for 2024 and beyond reveals a landscape rich with technological advancements poised to reshape how businesses approach outsourcing. Acknowledging and embracing these trends is crucial for outsourcing IT projects with efficiency and foresight.
Trend #1: AI and ML’s Impact on Offshore Outsourcing’s Future
Will offshore app developers be replaced by AI-driven systems? Not quite yet, but their productivity is set to increase dramatically, yielding additional profits for their remote employers in the United States, Canada, Western Europe, etc.
?? AI is one of the key IT outsourcing trends which raises debate on its potential to disrupt or dynamize the industry. While fears circulate that AI might reduce the demand for human coders, the consensus leans towards AI’s role in enhancing the future of IT outsourcing by augmenting human capabilities, not replacing them.
This is evident in scenarios like no-code web development platforms that, despite their simplicity, often require human expertise for complex website customizations, underscoring AI’s role as an accelerator rather than a replacement.
AI tools not only speed up development processes but also boost developer productivity, creating software outsourcing trends where AI complements human skills. This combination of offshore developers and AI equips businesses, particularly in the United States or Canada, with a powerful strategy for merging technology with human creativity and insight.
This streamlined table presents AI coding technologies provided by known organizations, focusing on enhancing developer productivity and efficiency in offshore programming through code completion, generation, and machine learning platforms:
| AI Coding Tool | Description | Provider |
| GitHub Copilot | AI-powered code completion tool. | GitHub |
| OpenAI Codex | AI system for code generation, aiding in various languages. | OpenAI |
| Amazon SageMaker | Cloud platform for ML, used to build AI coding tools. | Amazon Web Services |
| ChatGPT | Large language model for diverse coding tasks. | OpenAI |
| CodeT5 | Large language model trained on text and code. | Google AI |
Are there any outsourced IT specialties that AI might replace in 2024?
AI technologies have the potential to take over roles like computer support specialists. This is particularly relevant to live chat formats of customer support for specific software products, especially for typical and frequently asked questions.
This trend in outsourcing could enable American companies to reduce the number of people involved in outsourced/offshore support centers. However, scenarios requiring human operators to resolve complex or non-trivial issues will still need to be maintained.
Trend #2: Outsourcing IT Infrastructure to Cloud Computing Facilities ☁️?
The migration of operations to the cloud is not a new phenomenon, yet it remains an ongoing trend. Companies are continuously moving their data to outsourced hardware, purchasing remote storage and computing capabilities without buying the hardware itself.
The integration of cloud services has reshaped IT outsourcing, offering scalability, flexibility, and cost savings that appeal to businesses outsourcing computing infrastructure and applications to remote vendors.
This technology outsourcing trend enables dynamic resource adjustment and access to cutting-edge technology without hefty hardware investments.
Outsourcing IT infrastructure, particularly through practices like AWS cloud system development and hiring remote Azure developers, taps into global expertise for efficient cloud management. This approach ensures updated, secure, and optimized cloud systems, leveraging the global talent pool for top-tier cloud management and development skills.
Items that can be managed or outsourced to cloud vendors include:
- Databases: Essential for centralized data management, cloud databases enhance performance and accessibility across various applications, including pharmacy inventory management systems and hospital management software. They facilitate efficient cloud data storage, retrieval, and analysis, ensuring smooth operations and timely access to critical information.
- High-capacity data streams: Specialized in managing vast volumes of data in real time, this service is essential for applications like custom financial transaction processing, social media analytics, and IoT sensor data monitoring, where timely data processing and analysis are critical.
- Data lakes: Designed for storing immense volumes of structured and unstructured data, data lakes support a wide range of applications, from big data analytics and machine learning model training to complex event processing and data warehousing, enabling deep insights and data-driven decision-making.
- Serverless computing: Automatic scaling of application services without managing servers.
- Container management: Simplified deployment and scaling of applications.
- AI and ML platforms: Facilitate the deployment of intelligent algorithms and models, enhancing applications such as predictive analytics in finance, personalized recommendations in retail, and the use of AI in healthcare for diagnostics and treatment planning, driving innovation across industries.
- Backup and disaster recovery: Ensuring data integrity and availability post-disaster database/system restoration.
- Custom application development: Crafting bespoke software solutions tailored to unique business needs, this process leverages scalable cloud infrastructure and DevOps practices for swift, efficient development and deployment, optimizing cost and enhancing operational efficiency.
Hybrid and multi-cloud strategies bring further sophistication to technology outsourcing trends by combining the benefits of private and public clouds for tailored solutions or using multiple cloud providers to avoid vendor lock-in and optimize costs.
These strategies offer outsourced IT operations enhanced flexibility, disaster recovery, and regulatory compliance:
| Feature | Hybrid Cloud Strategy | Multi-Cloud Strategy |
| Definition | Combines private cloud and public cloud services to balance security and scalability. | Uses services from multiple cloud providers to avoid vendor lock-in and optimize performance. |
| Security | Offers a secure private cloud for sensitive data while leveraging public cloud for scalable resources. | Relies on the security measures of multiple providers, requiring comprehensive management to ensure data safety. |
| Cost Efficiency | Can be cost-effective by allowing data and applications to reside in the most appropriate location. | Potential for cost savings by selecting the most cost-effective services for each task, but requires management to avoid unnecessary expenses. |
| Scalability | Scalability is achieved by utilizing the public cloud’s resources. | High scalability by leveraging the best resources from multiple providers. |
| Vendor Lock-in | Potential risk of lock-in with the private cloud infrastructure. | Avoids vendor lock-in by distributing dependencies across multiple providers. |
Trend #3: Cybersecurity Trends in IT Outsourcing
A key trend in IT outsourcing is the deeper integration of vendors into the hiring companies’ core standards and practices.
| ? Based on a comprehensive survey conducted by the Global Economic Forum, 86% of business leaders and 93% of cybersecurity experts anticipate that current global geopolitical instability is somewhat or highly likely to result in a significant cyber event within the next two years. |
With the capacity to share and manage identical cloud infrastructures, companies are adamant about not compromising their security practices for the sake of lower costs associated with overseas IT specialists, which could expose them to certain risks. Instead, they opt to seamlessly integrate remote workers into their security workflows.
This strategic alignment ensures that remote outsourced teams don’t just meet the client’s rigorous security demands but also uphold common industry standards, such as ISO 27001, SOC2, and GDPR. This seamless assimilation and adherence to standards are achieved through:
- Establishing Comprehensive NDAs: The adoption of Non-Disclosure Agreements as a fundamental measure to protect confidential and proprietary information within the outsourcing partnership.
- Standard Compliance Verification: With the IT outsourcing industry evolving, companies need to verify that their outsourcing partners comply fully with critical security standards, including compliance with key regulations and frameworks like HIPAA, GDPR, CCPA, HL7, and PCI-DSS. This commitment underscores a united effort to fortify against the spectrum of cyber threats.
This evolving trend towards integration and standard compliance signifies a transition towards treating outsourced IT teams as an integral part of the company, completely in line with its security protocols and corporate ethos.
| Aspect | Strategy |
| Confidentiality | Implement comprehensive Non-Disclosure Agreements (NDAs). |
| Compliance | Ensure outsourcing partners adhere to standards such as HIPAA, GDPR, CCPA, HL7, and PCI-DSS. All of these standards can be required for products like custom medical staff management systems. |
| Integration | Treat outsourced teams as an extension of the company, aligning them with internal security protocols and values. |
| Cybersecurity | Implement advanced threat detection, continuous monitoring, and develop robust incident response plans. |
Trend #4: Fresh DevOps Practices Outsourced
| ? In line with outsourcing software development trends, forward-thinking companies are establishing unified platforms for developers, offering everything from code repositories to tools and SDKs. Currently, only 37% of developers have access to such integrated resources. However, by 2025, Gartner predicts that 75% of organizations will implement self-service developer portals to enhance efficiency and spur DevOps innovation. |
In 2024, DevOps service outsourcing—the integration of development and operations by leveraging external expertise—stands at the forefront of outsourcing software development trends. This movement signals significant technology outsourcing trends, shaping the future of software development. Here’s an overview of the pivotal trends for the upcoming year:
- AI in Operations (AIOps): Integrating AI into operations is trending due to its ability to automate complex decision-making, resulting in faster and more accurate responses to IT incidents.
- DevSecOps Evolution: The move towards DevSecOps reflects a growing recognition that security must be an inherent part of the development process, rather than an optional add-on, to counter rising cyber threats.
- Serverless Architecture Adoption: The shift to serverless architecture is innovative because it allows developers to focus solely on code, as the cloud provider manages the runtime environment, leading to more agile and cost-effective development.
- MLOps Emergence: The emergence of MLOps as a trend stems from the need to streamline the integration of machine learning models into production, ensuring they remain effective and accurate over time.
- The Rise of NoOps: The concept of NoOps is gaining ground as it promises a future where IT operations are so automated that there is minimal need for human maintenance, allowing businesses to reallocate human resources to more strategic tasks.
- GitOps for Infrastructure Automation: GitOps is becoming a trend because it leverages the power of version control for infrastructure management, providing a more reliable and auditable way to handle system changes.
- Advancements in ChatOps: ChatOps is evolving due to the implementation of AI, which enhances the speed and efficiency of DevOps teams by allowing for real-time interaction and automated task execution within chat applications.
- The Developer Experience (DevEx): Emphasizing DevEx is innovative as it directly impacts the quality of the work environment for developers, which translates to more efficient and creative software development outputs.
| Responsibility | Description |
| Application Planning & Development | Orchestrates the planning, testing, and development phases for application infrastructure, ensuring alignment with project goals. |
| CI/CD Pipeline Management | Constructs and manages Continuous Integration/Continuous Deployment pipelines to streamline and automate the software release cycle. |
| Automation Practices | Implements automation strategies to increase efficiency, reduce errors, and accelerate repetitive tasks within the development cycle. |
| Security & Environment Safeguarding | Proactively works to secure the development environment, safeguarding against threats and maintaining operational stability. |
| Performance Monitoring | Monitors and evaluates software performance consistently to identify improvements and ensure optimal operation. |
Trend #5: Green IT Outsourcing Practices
The shift towards environmental sustainability is reshaping IT outsourcing trends, as businesses increasingly seek out partners who share their commitment to green IT practices. This move towards eco-friendliness includes efforts like:
- Energy-efficient data centers: Focusing on reducing energy use and opting for renewable energy sources to power operations.
- Electronic waste reduction: Encouraging recycling and the repurposing of electronics to mitigate environmental harm.
- Sustainable development: Embracing development methods that aim to leave the smallest ecological footprint possible.
The search for the right outsourcing partner now heavily weighs on their dedication to sustainability. Companies are leaning towards vendors who not only support green initiatives but actively integrate them into their operations.
This shift highlights a growing trend in the industry to not just reduce costs, but also to reduce our impact on the planet.
Trend #6: Rise of Nearshore and Onshore Outsourcing
Nearshore software team outsourcing practice is becoming an increasingly popular IT outsourcing trend among U.S. companies striving for efficient collaboration with minimal time zone disruptions. LATAM countries, including Mexico, Brazil, and Argentina, are recognized for their rich pool of software development and IT expertise, closely synchronized with U.S. business hours.
This geographical and cultural alignment not only facilitates improved communication and project management but also combines cost savings with the advantages of proximal collaboration.
Services of the best nearshore outsourcing companies extend beyond mere cost reduction, emphasizing the value of seamless integration and teamwork enabled by sharing similar time zones with outsourcing partners.
Onshore Outsourcing with Offshore Benefits in the U.S.
Conversely, onshore outsourcing is witnessing a revival in the U.S. as businesses seek to minimize common offshore outsourcing risks, such as cultural differences and geopolitical issues. Though typically more expensive, onshore outsourcing is increasingly attractive for its compliance with U.S. regulations and operational synchronicity.
A growing trend is the emergence of U.S.-based companies, such as those headquartered in California, that blend onshore management with nearshore and offshore R&D services. This hybrid model offers the legal and operational benefits of onshore engagement—such as compliance with local laws and easier collaboration—while still capitalizing on the cost efficiencies of global talent distribution.
Such an approach not only meets high-security and regulatory standards but also provides cost benefits, making it a strategic choice for projects needing stringent compliance or benefiting from direct oversight.
Challenging Trends and Solutions in IT Outsourcing
Navigating the trend in outsourcing involves addressing inherent challenges like communication barriers, quality control, and data security concerns.
Variations in time zones, language differences, and cultural mismatches can complicate project alignment and smooth collaboration. Notable negative trends in 2024 include:
- Security Issues and Global Geopolitical Risks: An uptick in security breaches and geopolitical tensions makes companies cautious about their outsourcing destinations. Many are opting to partner with firms in politically stable regions like LATAM to mitigate risks.
- Intensified Talent Hunt for AI/ML Developers: The demand for specialized AI/ML developers is soaring, prompting companies to form internationally dispersed teams. The challenge of sourcing talent with specific skill sets from a single location is leading businesses to adopt a global talent acquisition strategy.
Innovative Solutions and Mitigation Strategies
To surmount these obstacles, embracing innovative solutions such as advanced communication technologies, applying Agile and DevOps methodologies, and enforcing stringent security measures has become crucial. Solutions include:
- Enhanced Communication Technologies: Leveraging state-of-the-art communication tools to bridge time zone and language barriers, fostering better project alignment and collaboration.
- Adoption of Agile and DevOps: Integrating Agile and DevOps practices to streamline workflows, improve efficiency, and ensure security is woven throughout the software development lifecycle.
- Stringent Security Measures: Implementing advanced security protocols, including encryption and access controls, to safeguard against data breaches and ensure compliance with global standards.
Future Outlook and Predictions
The future of IT outsourcing is on the brink of significant changes, driven by advancements in AI, a growing emphasis on cybersecurity, and an increasing preference for nearshore outsourcing. Key predictions include:
- AI and Automation Enhancements: Automation and AI technologies are set to revolutionize operational efficiencies, offering innovative solutions to longstanding challenges.
- Cybersecurity as a Forefront Concern: As digital threats proliferate, cybersecurity measures will become paramount, shaping outsourcing strategies and partner selections.
- Rise in Nearshore Outsourcing: The appeal of nearshore outsourcing is expected to surge, mitigating time zone and cultural discrepancies.
Anticipated Trends in the Coming Years
These trends highlight a dynamic shift towards more efficient, secure, and collaborative models in software development outsourcing trends.
The landscape of IT outsourcing is anticipated to evolve with several key trends emerging as pivotal forces:
- Strengthened Nearshore Options: A notable trend in outsourcing is the amplified interest in nearshore options to address collaboration and communication challenges.
- Cloud Integration Focus: The integration of cloud technologies in outsourcing practices is set to expand, offering scalable and flexible solutions.
- Sustainability Emphasis: An increased focus on environmental sustainability will influence vendor selection and project execution, aligning IT practices with green initiatives.
- Shift to Strategic Partnerships: The transition from transactional relationships to strategic partnerships will redefine collaboration models, focusing on long-term goals and mutual success.
Conclusion: Embracing IT Outsourcing Trends
The landscape of IT outsourcing is evolving rapidly, with technology outsourcing trends shaping the future of business strategies. Adapting to these changes is crucial for companies looking to leverage outsourcing for innovation, efficiency, and competitive advantage.
As trends like AI integration, cybersecurity focus, and nearshore collaboration gain momentum, businesses must remain proactive to harness their full potential.
Partnering with TATEEDA
TATEEDA is perfectly positioned to help U.S.-based businesses navigate these outsourcing software development trends. Offering a blend of onshore, offshore, and nearshore services, we specialize in cloud technology, risk mitigation, and providing access to specialized talent, including AWS and Azure developers, full-stack web developers, .NET engineers, and QA testers. Partner with TATEEDA to align with the latest trend in outsourcing and propel your projects forward.
