Beroe Inc. reports that the global IT outsourcing market is expected to grow at a compound annual growth rate (CAGR) of 6% until 2022. The rate of growth in the industry is expected to drive innovation in the tech field while improving cost-effectiveness for IT companies.
Global companies are outsourcing to meet deadlines, increase cost effectiveness and improve their talent pool.
The practice is also used by small businesses that do not have the resources to hire in-house. As companies continue to become global entities, outsourcing continues to rise in all sectors. The IT sector's 6% CAGR is expected to help the market reach $531 billion by 2022.
Latin America's outsourcing growth is rising, with the region expected to be a growth-driving market in the next few tears. North America, Western Europe and Asia all have high market maturity for outsourcing IT services.
Process automation and virtualization are key factors in the market's growth, with end-user computing services leading the way. Security services outsourcing and the wide adoption of cloud computing are expected to be key to the market's growth in the next three-to-five-year period.
The market is highly dominated by 8 to 10 companies all considered "tier 1" options. These companies are expected to lose some of their market share due to increased competition of tier 2 and 3 companies. Medium-sized enterprises will be vital in the growth of these lower-tier companies. Lower tier companies offer more competitive pricing, yet they lack some of the stringent management and skillset options of larger outsourcing agencies.
Emerging and development markets will be able to offer a cost advantage and include Brazil, Egypt, Poland and the Philippines. These markets also have a diverse labor force, which may be able to bridge the gap and offer dedicated development teams to smaller IT firms.
India remains one of the most common outsourcing options due to the country's low cost and extensive talent pool. It is expected that many IT companies will be moving away from India due to operational risks and poor management.
Tier 2 suppliers are expected to take a portion of Tier 1 suppliers' market by changing their market focus and services offered.
Competitive pricing is expected to remain as suppliers continue to derive business from the same regions and companies. Outsourcing as a whole is expected to continue to grow outside of the IT field, including growth in call center outsourcing and accounting outsourcing.
