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Software Development Outsourcing Demand Trend

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Software Development Outsourcing Demand Trend

Software Development Outsourcing Demand Trend

Ever wondered if you are alone in thinking about outsourcing your software development?  Wonder no more, here is a snippet of research we collected on the subject for our own planning, but we love to share…

According to Statista, revenue in the Application Outsourcing segment and specifically the Software Development Outsourcing segment is projected to reach US$116.00bn in 2022.

Revenue is expected to show an annual growth rate (CAGR 2022-2027) of 4.66%, resulting in a market volume of US$145.70bn by 2027.

The average Spend per Employee in the Application Outsourcing segment is projected to reach US$33.55 in 2022.

These are pretty impressive numbers, and yet they are a fraction of the market when considering outsourcing software development is still not the norm.  Lets look into some of the numbers in specific markets.

2022 in USDUSAUKGERMANYSPAINIRELAND
Outsourcing Revenue$42.41bn$8.55bn$6.50bn$2.12bnUS$352.50m
Outsourcing Revenue growth rate (CAGR 2022-2027)3.88%4.40%3.70%4.15%5.32%
Average Spend per Employee$252.60$241.90$149.30$93.43$143.80

The market obviously tanked in 2020 due to Covid-19, which effected everyone across all sectors, however they rebounded in 2021 and the upward growth trajectory relates to changing working models and acceleration of delayed projects.

No surprises there that the USA is the biggest consumer of software development Business Process Outsourcing (BPO) and specifically software development outsourcing with Japan and the UK coming a close second.  The spend growth potential for software development outsourcing in Saudi Arabia is encouraging specially when looking at their neighbour the UAE which spends more and it is less than a third of the market size!

% OF OVERALL 2022 REVENUE
  • USA
  • Northern Europe*
  • GCC*
  • Japan

* Selected Major Countries

% Outsourcing Revenue growth rate (CAGR 2022-2027)

Interestingly Ireland is one of the fastest growing markets most probably due to companies moving there due to tax incentives and outsourcing demands stemming from there due to increased business change.

The market is still not large enough to make it into global indices that are observed by the financial markets and analyst pundits.  Yet still, its a significant segment employer and growing with the drivers being Digital Transformation, Artificial Intelligence (AI) and Machine Learning (ML).

Outsourcing software development is a great way to get high-quality, cost-efficient coding services, get in touch with us if you want to explore a more cost efficient approach to your application modernization or digital strategy.

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