The revenue of the IT outsourcing market in 2024 is estimated to reach $512.47 billion

🌐 In today’s rapidly evolving digital landscape, understanding the intricacies of the outsourcing market has become crucial for businesses striving to maintain competitive edges and foster innovation. In 2024, the outsourcing industry is poised to undergo transformative shifts, influenced by advancing technologies, changing business priorities, and the increasing demand for specialized skills.

COVID-19 has prompted a shift in outsourcing strategies towards shoring up value and driving down costs while renewing the focus on risk management. The pandemic has forced organizations to reevaluate and often simplify their outsourcing priorities to emphasize cost-effectiveness and risk mitigation. The complexity of third-party ecosystems has grown, increasing the importance of effective supplier management. The pandemic has stressed the need for robust supplier management systems to handle regulatory compliance, security risks, and data protection requirements more effectively, according to the Global Risk Report by the World Economic Forum.

The Russia-Ukraine war disrupted the chances of global economic recovery from the COVID-19 pandemic, at least in the short term. The war between these two countries has led to economic sanctions on multiple countries, a surge in commodity prices, and supply chain disruptions, causing inflation across goods and services and affecting many markets across the globe.

Our comprehensive research delves into the outsourcing market of 2024, aimed at equipping business entrepreneurs, web developers, and IT specialists with data-driven insights and strategic knowledge to navigate this dynamic environment. By revealing this information, our audience can anticipate changes, make informed decisions, and position themselves at the forefront of innovation in their respective fields.

⭐ Join us as we explore the future of outsourcing, uncovering opportunities and challenges that will shape the industry landscape in 2024 and beyond.

Introduction

IT outsourcing involves contracting out IT functions to external consulting companies or contractors. According to the Global IT Outsourcing Market Size, Status, and Forecast 2024–2031, this market segment is predicted to show significant growth, driven by factors such as cost reduction, access to global talent, and technological advancements. Analyzing its revenue trends provides insights into the health of the tech industry and the global economy.

👉 The global revenue in the ‘IT Outsourcing’ segment of the IT services market was forecast to continuously increase between 2024 and 2028 by in total 265.3 billion U.S. dollars (+51.77 percent). After the eighth consecutive increasing year, the indicator is estimated to reach 777.74 billion U.S. dollars and therefore a new peak in 2028.

👉 According to the Deloitte Global Outsourcing Survey, outsourcing can be broadly categorized into several types, reflecting the evolution in how organizations approach external partnerships for business operations:

1. Traditional Outsourcing: This is the conventional form of outsourcing, where specific tasks or services are contracted out to third-party vendors. This model focuses on the delegation of non-core functions to external providers. For example, many companies, especially in retail and telecommunications, outsource their customer support to specialized firms that can efficiently handle large volumes of calls and inquiries. Fivewalls — is a software development company that since 2015, has developed multiple big projects of internal management systems, marketing instruments, and logistics solutions. The company aims to provide expert assistance in custom software app development and management, anticipating and resolving issues before you ask. As a top software development company, according to Clutch, our team strives to handle the increasing demands for online business presence. We share expertise, tailor solutions to clients’ needs, and prioritize security and efficiency.
2. Managed Services: Under this model, organizations engage third-party providers not only to take over the management of certain functions but to improve them over time. This often includes comprehensive management of IT services, human resources, or customer support operations. For example, an IT-managed service provider might take complete responsibility for all IT services for a company, including management of infrastructure, cybersecurity, network operations, and technical support. This is not just about performing tasks but also ensuring that the IT operations align with the strategic goals of the organization. IBM provides comprehensive IT-managed services that include cloud services, data center operations, and IT support. Their services are designed to manage and optimize IT systems and operations, making them a prime example of managed services in the IT sector.
3. Operate Services: This newer model is a step further than managed services, where third-party providers offer end-to-end management of a business process or function. This type of outsourcing is increasingly integrated and aligned with the business outcomes of the client company, offering not just service delivery but also strategic benefits. A common example would be cloud services where the provider manages and continuously improves cloud infrastructure and related services, often including integration with existing business processes to drive innovation and efficiency. Accenture provides end-to-end process operations services, which include transformational services along with ongoing operations management. Their offerings are geared toward enhancing business processes and delivering outcomes based on predefined standards.
4. Global In-House Centers (GICs): These are captive centers that operate as an extension of the business itself rather than as an external service provider. GICs can perform a variety of functions, from software development to business processes, providing the parent company with greater control over operations and closer integration of outsourced functions. GICs are a prominent feature of the outsourcing landscape, especially in regions like Eastern Europe and Ukraine specifically, where companies leverage the local talent pool while maintaining control over their processes and intellectual property. Here are some examples of companies that have established GICs in Ukraine and other Eastern European countries: EPAM Systems, Luxoft, and Ciklum. These companies have successfully used the GIC model to optimize costs and enhance efficiency while benefiting from the region’s skilled IT workforce. They are illustrative of a broader trend where the Eastern European region has become an attractive destination for companies looking to establish GICs due to a combination of technical expertise, favorable economic conditions, and strategic geographical location.

Each of these outsourcing types represents a different level of collaboration and integration between the outsourcing company and the service provider, with a growing focus on strategic partnerships and operational excellence.

Historical Revenue Analysis (2019–2023)

The historical revenue analysis for the outsourcing market from 2019 to 2023 reveals significant growth and transformation, influenced by technological advancements and varying global economic conditions.

In 2019, the outsourcing market was already on a growth trajectory, benefiting from the digital transformation trends that emphasized efficiency and cost reduction across various industries. That year, the market was valued at USD 333.7 billion, growing steadily despite the challenges posed by the global pandemic, which initially slowed but then accelerated digital transformations across industries.

As the world approached 2020 and COVID-19 became a global pandemic, the outsourcing industry saw a further push towards digital operations, with companies seeking to mitigate the impacts of lockdowns and economic slowdowns by leveraging outsourced services. The market experienced significant growth, reaching approximately USD 620.381 billion In 2020. The jump was largely due to the COVID-19 pandemic, which accelerated the shift towards remote working, cloud computing, and enhanced IT security measure. The pandemic highlighted the need for businesses to maintain operational continuity and adapt to new work environments, which in turn increased reliance on outsourced IT services to handle these transitions effectively.

The increasing adoption of cloud migrations and cloud services has shifted IT outsourcing from a simple cost-reduction tactic to a strategic component integral to business growth, enhancing customer experiences, and achieving competitive disruption. Additionally, this report on IT outsourcing notes a trend towards integrating offshore teams with on-site teams to improve agility, which refers to reducing the time-to-market for businesses.

In 2021, the global IT outsourcing market was valued at approximately USD 526.6 billion. According to Statista, the slight decline from the 2020 peak could be attributed to market stabilization after the unprecedented spike in IT demands due to the pandemic.

By 2022, this market size was estimated at approximately USD 525 billion, showing a sustainability trend in the industry, driven by the adoption of cloud computing, robotic process automation (RPA), and artificial intelligence (AI). These technologies helped streamline operations and reduce costs, which was crucial during the uncertain economic times caused by the pandemic. The focus was particularly strong on business process outsourcing (BPO), which saw increased demand for customer service, finance, and accounting outsourcing services.

In 2023, the global outsourcing market is highly valued across various segments, reflecting a vibrant and expanding sector. The IT outsourcing market alone was valued at approximately USD $575,2 billion.

Overall, the global outsourcing market is diversifying as businesses seek strategic partnerships that offer not only cost benefits but also innovation and access to new technologies. The shift from traditional business process outsourcing (BPO) services to more knowledge-based outsourcing (KPO) is particularly pronounced in developed markets, reflecting broader changes in the global economic landscape.

Overall, the outsourcing market’s evolution from 2019 to 2023 showcases how businesses have increasingly relied on external providers to gain access to new technologies and specialized services, thereby driving revenue growth in this sector. For more detailed insights into the outsourcing market’s trends and future outlook, exploring comprehensive market reports would provide deeper analyses and forecasts.

Current Market Analysis 2024

The global outsourcing market is experiencing significant growth, with a particular emphasis on the IT outsourcing sector. As of 2024, trends indicate a strong trajectory of expansion across various regions, fueled by technological advancements and changing business models. The IT Outsourcing Market size is expected to reach USD 617.69 billion by the end of 2024. This projection is based on the ongoing adoption of cloud computing, AI, and automation technologies. Moreover, geopolitical tensions and the global economic climate could play critical roles in shaping outsourcing strategies, particularly with companies looking to diversify their geographic risk.

Industry Shifts and Business Priorities

Businesses are evolving from traditional multi-vendor outsourcing to forming strategic partnerships that focus on high-quality service and long-term relationships. This shift is largely facilitated by the rise of remote work, which has made outsourcing more accessible and diversified, integrating remote resources with on-site operations to create a hybrid model.

In 2024, some of the major players operating in the global IT outsourcing market include well-known firms such as:

• IBM Corporation
• Hewlett Packard Enterprise Company
• Accenture plc
• VMware Inc.
• Cisco Systems Inc.

These companies are considered front runners due to their extensive service offerings, global presence, and strong brand reputations in the IT outsourcing sector. They provide a wide range of outsourcing services, from cloud computing and IT infrastructure management to cybersecurity and customized IT solutions, catering to diverse industries worldwide.

Security and Compliance Challenges

With the increase in digital dependency, data security remains a crucial challenge. Companies and their outsourcing partners are investing more in cybersecurity measures to protect sensitive information and comply with regulatory changes. This includes implementing robust encryption protocols, regular security audits, and comprehensive training for all involved personnel.

The demand for outsourcing is expected to continue rising, driven by the need for cost efficiency, access to specialized skills, and the ability to scale operations flexibly. The market is adapting to more sophisticated business needs, including knowledge process outsourcing which involves high-level tasks such as R&D, data analysis, and decision support.

The outsourcing market in 2024 is set to grow, with IT outsourcing playing a pivotal role in this expansion. Companies are increasingly focusing on strategic partnerships and integrating advanced technologies to enhance their outsourcing strategies. As businesses worldwide adapt to these changes, the global outsourcing landscape is poised to evolve significantly, offering numerous opportunities for growth and innovation.

Future Predictions (2025–2028)

The IT outsourcing market is poised for substantial growth from 2025 to 2029, driven by ongoing technological advancements and an increased demand for digital transformation across various industries. The market is expected to continue its expansion, particularly with the integration of technologies such as artificial intelligence (AI) and machine learning (ML), which are anticipated to enhance operational efficiencies and service personalization. These technologies are expected to transform traditional outsourcing models by enhancing efficiency, reducing operational costs, and enabling more personalized and adaptive service offerings.

Moreover, the growing emphasis on cybersecurity and data protection regulations will compel outsourcing providers to upgrade their security frameworks significantly. This shift will not only ensure compliance with international standards but also serve as a critical market differentiator attracting clients to prioritize data integrity and security.

Finally, sustainability and corporate responsibility are poised to become crucial factors in vendor selection processes. Companies will prefer outsourcing partners who demonstrate strong commitments to environmental sustainability and ethical business practices, reflecting broader corporate goals and consumer expectations. These predictions underscore a future where outsourcing is not just a means to cut costs but a strategic tool for innovation, risk management, and sustainable growth.

Market Growth and Regional Trends

👉 IT Outsourcing Market Growth: According to Mordor Intelligence, the IT outsourcing market is projected to reach impressive figures in 2024 and continue growing at a steady rate through 2029. This growth is driven by the adoption of cloud services, increased digital transformation, and the expanding use of ‘As-a-Service’ models which are becoming integral to many business operations.

North America and Europe are also anticipated to show significant growth, estimated at CAGRs of 3.7% and 3.3% respectively. These regions are focusing on outsourcing services that incorporate artificial intelligence, machine learning, and automation to improve efficiency and reduce costs, shifting towards higher-value services such as research and development and analytics.

Latin America and Eastern Europe are emerging as attractive regions for nearshoring due to cultural and temporal proximity to major markets in the U.S. and Western Europe, respectively. These regions are improving their IT infrastructure and expanding their talent pools, which are projected to grow at a CAGR of around 5% and 4.2% respectively, making them competitive alternatives to more established markets.

Overall, the global outsourcing market is diversifying as businesses seek strategic partnerships that offer not only cost benefits but also innovation and access to new technologies. The shift from traditional BPO services to more knowledge-based outsourcing (KPO) is particularly pronounced in developed markets, reflecting broader changes in the global economic landscape.

Conclusion

As we look toward 2024 and beyond, the IT outsourcing market is influenced by technological advancements, evolving business imperatives, and the lingering impacts of the COVID-19 pandemic, with an estimated market size of $512.47 billion in 2024.

The markets are becoming more integrated and technology-driven outsourcing solutions. The incorporation of AI and ML is set to change operational efficiencies and client service models. These technologies are not only improving traditional outsourcing functions but are also enabling service providers to offer more personalized and adaptive solutions, thus driving the market value projected to reach $777.74 billion by 2028.

Businesses are increasingly leveraging outsourcing to navigate the complexities of the digital economy, mitigate risks, and capitalize on cost efficiencies. The shift from traditional outsourcing models to managed and operated services reflects a deeper engagement with outsourcing partners, focusing on strategic benefits beyond mere cost savings. Companies like IBM and Accenture are leading this transformation, showcasing the integration of cloud services and end-to-end process management as core to their offerings.

Security and compliance have risen to the forefront of outsourcing considerations. The increasing emphasis on data protection and regulatory compliance is compelling providers to fortify their security measures, making cybersecurity a key differentiator in vendor selection. Furthermore, sustainability and ethical business practices are becoming critical factors, aligning with broader corporate responsibility goals. The continuous demand for digital transformation, coupled with the strategic adoption of emerging technologies like AI and cloud computing, will drive this expansion, as companies across the globe increasingly rely on IT outsourcing.

In conclusion, the future of IT outsourcing looks promising, with significant opportunities for growth and innovation. Organizations that can effectively leverage emerging technologies and adapt to the changing landscape will likely find themselves well-positioned to succeed in this dynamic market. As we move forward, the ability to anticipate industry trends, maintain high standards of security and compliance, and commit to sustainable practices will be crucial in shaping the success of IT outsourcing endeavors.