IT Outsourcing Market Size
| Study Period | 2018 - 2028 |
| Market Size (2023) | USD 585.60 Billion |
| Market Size (2028) | USD 764.63 Billion |
| CAGR (2023 - 2028) | 5.48 % |
| Fastest Growing Market | Asia-Pacific |
| Largest Market | Asia-Pacific |
Major Players
*Disclaimer: Major Players sorted in no particular order |
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IT Outsourcing Market Analysis
The IT Outsourcing Market size is expected to grow from USD 585.60 billion in 2023 to USD 764.63 billion by 2028, at a CAGR of 5.48% during the forecast period (2023-2028).
- Information Technology has become a competitive edge for most of the organization. Moreover, IT outsourcing has become more than a simple cost reduction process with the cloud migrations and options of cloud services. Therefore, this new form is mainly driven by organizational motivations in terms of customer experience, business growth, and competitive disruption.
- The rising adoption of cloud services since the outbreak of COVID-19 is anticipated to build a favorable market scenario for the IT outsourcing market growth as organizations using such services often outsource the maintenance and portion of development work to third parties.
- More importantly, such a rise in preference amongst the newer and even smaller organizations has led the key vendors of the market to increasingly concentrate on driving out a way to integrate the offshore team with the on-site. Another critical aspect driven by small-scale players is the agility in vendor offerings, which refers to the time-to-market.
- Cloud migration and adoption software have led outsourcing customers to divert resources from low-value assets to specialized employees while focusing on more flexible, tailorable, and evolution-friendly solutions.
- However, the lack of data security in cloud and server-based services is hindering the market's growth. Cloud-based services pose many specific security issues and challenges. Data is usually stored with a third-party provider and can be accessed over the internet in the cloud. This indicates that visibility and control over that data are limited. Nevertheless, growing demand for efficiency and scalable infrastructure and increasing cloud migration are driving the market.
IT Outsourcing Market Trends
Ongoing Migration Toward the Cloud and Adoption of Virtualized Infrastructure
- Cloud migration and adoption software has led outsourcing customers to divert resources from low-value assets to specialized employees while focusing on more flexible, tailorable, and evolution-friendly solution.
- Traditionally, IT outsourcing has been tangible, with servers, data centers, networks, specifications, person-hours, and lines of code deployed. With the rise of cloud-based services, more flexible, asset-free IT services are available on demand. On the other hand, cloud computing has also led to a fundamental shift in how companies pay for and access IT services.
- Companies looking forward to outsourcing cloud services have regarded cost optimization as a significant aspect. Multi-cloud strategies, therefore, have been gaining momentum and allowing multiple providers to reduce concentration risk.
- For instance, in November 2022, VodafoneZiggo, a provider of fixed, mobile, and integrated communication and entertainment services to consumers and businesses, has chosen Cognizant as its managed services partner to consolidate and support VodafoneZiggo's IT operations, cloud infrastructure, and virtualized mobile network infrastructure.
- There would be a rising need for IT outsourcing services specializing in cloud infrastructure and administration because firms are increasingly moving their operations to the cloud. In addition, IT outsourcing companies emphasize cybersecurity procedures in their cloud service offerings to protect their clients' data and systems from cyberattacks.
Asia-Pacific Accounts for the Largest Market Share
- China has been one of the significant outsourcing destinations. The outsourcing industry weighs benefits that the majority of US companies find attractive. Reduced development costs play a crucial role in retaining the original uses of outsourcing. King White, CEO of Site Selection Group, a global location advisor, believes that China has the potential to become one of the lucrative outsourcing markets that are even more cost-competitive than India.
- Over the past two decades, the IT industry in the country has witnessed impressive growth and has become a key industry in the country's overall economy. In the current 5-year plan, the government has significantly focused on making IT one of the seven strategic industries that will help the country move from a cheap-labor manufacturing outsourcing to a world-class, innovation-driven IT outsourcing.
- India is one of the most mature global IT outsourcing destinations, with many options. The country has worked in this direction for over 25 years and has maintained its dominance among the top IT outsourcing destinations. With the demand for skilled software developers rising, IT outsourcing companies out of the country rapidly expand their operations worldwide. The cost factor and talented skill pool have played a key role in assuring the country's dominance in the market.
- Many global IT service providers are expanding their business in India to enable manufacturing companies’ productivity by managing their IT and network infrastructures, which is fuelling the growth of the market in the APAC region. For instance, in September 2022, Cloud major IBM and Bharti Airtel announced the launch of Airtel's edge computing platform in the country. The Airtel edge computing platform backed by IBM Cloud would help Maruti Suzuki’s initiative to simplify plant productivity and quality operations.
- Aditionally, Indonesia is gaining traction and offering similar IT outsourcing services, especially software development services. Home-grown software development providers have been growing. This has assisted the country in achieving a preference for being a nearshore/offshore software developer by opening up R&D centers.
IT Outsourcing Industry Overview
The IT outsourcing market is highly competitive owing to multiple vendors providing IT services to the domestic and international markets. To sustain in the market and retain their clients, companies are developing advanced technologies to play on the competitive edge, thereby intensifying the competitive rivalry in the market.
- January 2023 - Accenture has planned to buy SKS Group, a consultancy company that uses SAP S/4HANA solutions to assist banks in Germany, Austria, and Switzerland in modernizing their technological infrastructure and satisfying regulatory requirements. The acquisition would increase Accenture's capacity to provide specialized banks with technology, consulting, and regulatory services.
- December 2022 - NN Life Insurance Company, a leading player in Japan for the SME segment, which provides innovative Insurance solutions, has partnered with Infosys for its Cloud and Agile Transformation. The company would leverage the Infosys Modernization Platform, part of the Infosys Cobalt suite, for end-to-end transformation to Azure Cloud, deployed agile processes and introduced cloud native capabilities for NN Life Insurance.
IT Outsourcing Market Leaders
IBM Corporation
DXC Technologies
Accenture PLC
NTT Corporation
Infosys Limited
*Disclaimer: Major Players sorted in no particular order
IT Outsourcing Market News
- March 2022 - Cognizant collaborated with Microsoft to deliver a new digital health solution to enhance remote patient monitoring for improved medical care. Cognizant's new solution, leveraging the Microsoft Cloud for Healthcare components, is the first of several planned offerings that combine remote patient monitoring and virtual health, utilizing products like smartwatches, blood pressure monitors, and glucose meters to collect and communicate patient health data to providers. Built-in analytics allow providers to cross-reference historical health information to gain patient insights and potentially identify early warning signs of chronic conditions to take preventative measures.
- February 2022 - WNS Holdings Limited, a leading provider of global Business Process Management (BPM) solutions, unveiled WNS Triangle, the new data, analytics, and Artificial Intelligence (AI) unit of WNS. Driven by a specialized team of over 4,000 data scientists, data engineers, and domain experts, WNS Triangle powers transformation by enabling businesses to define the correct data, analytics, and AI strategy and execute that strategy with cloud-based platforms and solutions, resulting in improved outcomes.
IT Outsourcing Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.2.1 Growing Demand for Efficiency and Scalable IT Infrastructure
4.2.2 Organization are Increasingly Focusing on IT as a means to Gain Differentiation by Relying on Outsourced Vendors
4.2.3 Ongoing Migration Toward the Cloud and Adoption of Virtualized Infrastructure
4.3 Market Challenges
4.3.1 Fragmented Nature of the Market And Growing Incidence of Data Breaches
4.3.2 Dynamic Needs of IT Structure Impacts the Cost of Customization for End Users
4.4 Impact of COVID-19 on the IT Outsourcing industry
4.5 Industry Attractiveness - Porter's Five Forces Analysis
4.5.1 Threat of New Entrants
4.5.2 Bargaining Power of Buyers
4.5.3 Bargaining Power of Suppliers
4.5.4 Threat of Substitute Products
4.5.5 Intensity of Competitive Rivalry
5. MARKET ANALYSIS
5.1 Trends Related to Onshoring and Offshoring
5.2 Breakdown of Outsourcing Industry - BPO vs IT-based outsourcing
5.3 Impact of the Ongoing Commodification of IT Solutions
5.4 Analysis of IT Outsourcing and Managed Service Industry
5.5 Breakdown of the Major IT outsourcing Segments - Application and Infrastructure
5.6 Impact of Digital Transformation and Emergence of "As-a-Service" Model
6. MARKET SEGMENTATION
6.1 By Organization Size
6.1.1 Small and Medium Enterprises
6.1.2 Large Enterprises
6.2 By End-user Vertical
6.2.1 BFSI
6.2.2 Healthcare
6.2.3 Media and Telecommunications
6.2.4 Retail and E-commerce
6.2.5 Manufacturing
6.2.6 Other End-user verticals
6.3 By Geography
6.3.1 North America
6.3.1.1 United States
6.3.1.2 Canada
6.3.2 Europe
6.3.2.1 United Kingdom
6.3.2.2 Germany
6.3.2.3 France
6.3.2.4 Italy
6.3.2.5 Spain
6.3.2.6 The Nordics
6.3.2.7 Benelux
6.3.2.8 Poland
6.3.2.9 Rest of Europe
6.3.3 Asia-Pacific
6.3.3.1 China
6.3.3.2 India
6.3.3.3 Japan
6.3.3.4 Indonesia
6.3.3.5 Vietnam
6.3.3.6 Malaysia
6.3.3.7 South Korea
6.3.3.8 Rest of Asia Pacific
6.3.4 Latin America
6.3.4.1 Brazil
6.3.4.2 Mexico
6.3.4.3 Colombia
6.3.4.4 Rest of Latin America
6.3.5 Middle East & Africa
6.3.5.1 Gulf Cooperation Council (GCC)
6.3.5.2 South Africa
6.3.5.3 Turkey
6.3.5.4 Rest of Middle East & Africa
7. COMPETITIVE LANDSCAPE
7.1 Company Profiles
7.1.1 IBM Corporation
7.1.2 DXC Technologies
7.1.3 Accenture PLC
7.1.4 NTT Corporation
7.1.5 Infosys Limited
7.1.6 Tata Consultancy Services
7.1.7 Cognizant Technology Solutions Corporation
7.1.8 Capgemini SE
7.1.9 Wipro Limited
7.1.10 Andela Inc.
7.1.11 WNS Global Services
7.1.12 Pointwest Technologies
7.1.13 ATOS SE
7.1.14 Amadeus IT Group
7.1.15 Specialist Computer Centres (SCC)
7.1.16 HCL Technologies Ltd
- *List Not Exhaustive
8. RELATIVE RANKING ANALYSIS OF THE MAJOR IT OUTSOURCING COMPANIES OPERATING WORLDWIDE
9. MARKET OUTLOOK
IT Outsourcing Industry Segmentation
IT outsourcing involves a contractual arrangement where IT service providers take complete ownership and control over the client’s IT infrastructure. The growing emphasis on operational efficiency and cost-effectiveness led to increased demand for outsourcing to offshore companies. The study tracks the regional and country-level market demand for IT outsourcing and provides detailed coverage of the major end-user trends affecting adoption.
The IT Outsourcing Market is segmented by Organization Size (Small and Medium Enterprises, Large Enterprises), End-user Vertical (BFSI, Healthcare, Media and Telecom, Retail and E-commerce, Manufacturing), and Geography (North America, Europe, Asia Pacific, Latin America, and Middle East and Africa). The market sizes and forecasts are provided for a value of USD billion for all the above segments.
The IT Outsourcing Market is valued at USD 557.36 billion in the base year and is expected to grow at a CAGR of 5.48% during the forecast period to become USD 764.63 billion by the next five years.
| By Organization Size | |
| Small and Medium Enterprises | |
| Large Enterprises |
| By End-user Vertical | |
| BFSI | |
| Healthcare | |
| Media and Telecommunications | |
| Retail and E-commerce | |
| Manufacturing | |
| Other End-user verticals |
| By Geography | |||||||||||
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IT Outsourcing Market Research FAQs
How big is the IT Outsourcing Market?
The IT Outsourcing Market size is expected to reach USD 585.60 billion in 2023 and grow at a CAGR of 5.48% to reach USD 764.63 billion by 2028.
What is the current IT Outsourcing Market size?
In 2023, the IT Outsourcing Market size is expected to reach USD 585.60 billion.
Who are the key players in IT Outsourcing Market?
IBM Corporation, DXC Technologies, Accenture PLC, NTT Corporation and Infosys Limited are the major companies operating in the IT Outsourcing Market.
Which is the fastest growing region in IT Outsourcing Market?
Asia-Pacific is estimated to grow at the highest CAGR over the forecast period (20221-2028).
Which region has the biggest share in IT Outsourcing Market?
In 20221, the Asia-Pacific accounts for the largest market share in IT Outsourcing Market.
IT Outsourcing Industry Report
Statistics for the 2023 IT Outsourcing market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. IT Outsourcing analysis includes a market forecast outlook to 2028 and historical overview. Get a sample of this industry analysis as a free report PDF download.
