Top 7 Software Development Outsourcing Trends in 2023

Do you want to learn about the latest trends in software development outsourcing?

If yes, you are reading the right blog post.

During the process of outsourcing software development, how do you ensure to get valuable and effective ROI when investing in outsourcing?

To help you, we have identified 7 emerging trends that may impact the software outsourcing industry in the upcoming years.

Read this article that describes detailed information about software development outsourcing trends.

Let’s get started.

List of the Latest Software Development Outsourcing Trends

1. Shift to Agile Methods

   Traditional software development models like Waterfall are rigid and inflexible which makes it difficult to adapt to changes during the project lifecycle. As this is a significant challenge for outsourcing software development companies, the adoption of Agile becomes the primary choice.

   Agile methodologies become a solution by offering dynamic project modification and shorter cycles resulting in faster development with fewer risks. Also, the Agile method offers benefits in the evolving software development industry.

   How Agile is Addressing These Challenges in the Outsourcing Market

   • Agile methodologies allow continuous changes which is a limitation in traditional models.
   • Agile’s collaborative and self-organizing team structure improves the efficiency of overall software development.
   • Agile specialists deliver high-quality software swiftly by executing a faster route to market your software which is a good benefit compared to traditional methods.

   Why Agile Has Become a Key Trend in Outsourcing

   • Traditional software development models’ rigidity failed to meet the software industry’s dynamic demands. On the other hand, Agile practices solve challenges effectively with their adaptability and flexibility.
   • The 16th State of Agile Report shows 80% of organizations practice Agile which results in an undeniable impact on software outsourcing trends.

   Agile software development methodologies are useful for project management to overcome traditional software development challenges. Overall, also focus on outsourcing software development services providers to stay competitive in the market.

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2. Transitioning to Hybrid Work Culture

   The COVID-19 pandemic, an unexpected yet transformative shift in the global workforce’s operation resulting in a transition to remote work. The software industry also adapts to the need for remote teams.

   Most software development outsourcing companies shifted to either a hybrid or remote software-building teams culture. This transition towards software outsourcing is emerging as a new trend as it helps from cost effectiveness to improved productivity.

   How Hybrid Culture is Influencing Software Outsourcing

   • Remote work culture expands access to a global talent pool which overcomes the geographical limitation of traditional office-based setups.
   • A remote or hybrid model significantly reduces operational costs, including overhead expenses like office rent, utilities, and commute costs.
   • This model provides flexibility to employees and boosts productivity by allowing software development teams to work during their most productive hours.

   Why Remote Culture Has Become a Key Trend in Software Outsourcing

   • The COVID-19 pandemic turned companies to adapt to remote work which later proved that productivity is achievable beyond traditional office boundaries.
   • Gartner’s survey indicates that 82% of companies plan to allow employees to work remotely.

   The transition to remote or hybrid cultures is not just limited to pandemic-like situations. But, it has become a necessity for businesses seeking to optimize cost and productivity during software development outsourcing.

3. Incorporation of AI and ML Technology

   Incorporating AI and ML technologies for advanced software development projects has become a necessity. These two technologies revolutionized software development to a new level of automation and increased work accuracy.

   Enterprises or new-generation businesses are now increasingly outsourcing to tech companies skilled in leveraging AI and ML technologies for robust software solutions. This reason makes the incorporation of artificial intelligence and machine learning one of the key software outsourcing trends.

   How AI and ML Technologies are Influencing Software Outsourcing

   • AI-powered tools help to automate coding, detect bugs, and enhance software quality. With such AI tools, the level of efficiency and accuracy increases compared to human efforts alone.
   • ML technologies can analyze patterns, predict outcomes, and contribute to the development of applications which provide value to end users.

   Why AI and ML Technologies Have Become a Key Trend in Software Outsourcing

   • The complexity and scope of today’s software requirements are high which can be achieved by utilizing AI and ML for advanced software earlier when compared to only human efforts.
   • According to MarketsandMarkets, AI in the software development sector is expected to reach $1,345.2 billion by 2030. This data shows that the AI market is growing and resulting in a positive impact on the software development industry.

   Leveraging AI and ML technologies is a strategic move for most businesses aiming for efficiency, accuracy, and value-addition in software outsourcing.

4. Integration Security With DevSecOps to Mitigate Risks

   Cyber threats are frequently increasing due to a lack of security loopholes in new and evolving technology. To resolve this threat, the concept of DevSecOps is adopted by the best software development outsourcing companies. This approach is an integration of security practices within the DevOps workflow which has emerged as one of the top software outsourcing trends.

   Businesses are choosing to outsource software development to software agencies that are well-versed in DevSecOps practices. However, security and data protection is a fundamental part of the entire software development lifecycle; protecting sensitive data is as compulsory as developing your software product.

   How DevSecOps is Influencing Software Outsourcing

   • DevSecOps integrates security practices into the DevOps workflow that helps software development outsourcing companies address security issues earlier.
   • By partnering with DevSecOps software outsourcing companies, ensure that security is part of every stage of the software development lifecycle.
   • DevSecOps improves the speed and efficiency of the security response by reducing the potential risks of cyber threats.

   Why DevSecOps Has Become a Key Trend in Software Outsourcing

   • The increasing frequency of cyber threats requires a proactive and integrated approach to security. This is where DevSecOps becomes an effective strategy to implement.
   • The DevSecOps market is expected to grow at a CAGR of 23.3% from 2021 to 2028, underlining its growing significance in software outsourcing GrandViewResearch.

   The integration of DevSecOps in software outsourcing is a strategic move for businesses seeking to build secure software solutions. In today’s digital era, DevSeOps demonstrates the importance of security.

5. Leveraging Data Science for Advanced and Powerful Development

   Data science is important when creating modern software. The reason is data science provides insights that improve decision-making, UI/UX, and performance optimization.

   Offshore or nearshore software development outsourcing partners equipped with data science expertise are capable of creating predictive models, analyzing user behaviour, and personalizing software based on data-driven insights. Thus, in the end, businesses get software that helps them to improve their business and get better ROI on outsourcing.

   How Data Science is Influencing Software Outsourcing

   • Data science provides insights that drive decision-making processes when creating strategic planning.
   • Data science helps to improve UI/UX through the analysis of user behaviour and the designing of personalized experiences.
   • Data science enables performance optimization which allows development companies to maximize the efficiency of your software.

   Why Data Science Has Become a Key Trend in Software Outsourcing

   • The need for effective decision-making is increasing due to the complexities of user requirements and market dynamics.
   • The Data Science Platform market size is projected to grow to $322.9 billion by 2026, indicating the rising demand for data-driven software development outsourcing, as per MarketsandMarkets.

   Leveraging data science in software outsourcing is a strategic necessity for businesses seeking to develop insightful, user-centric, and optimized software solutions.

6. Choosing to Work With Multiple Sourcing Partners

   As a business owner, ideally, you rely on a single outsourcing partner for your software development needs. The rise of complex project requirements is challenging the traditional approach to talent acquisition.

   However, software development outsourcing is shifting to partnering with multiple vendors. Outsourcing to multiple partners allows you to tap into the unique expertise of different software outsourcing vendors that provide you with quality output mitigating the risk.

   How Multisourcing is Influencing Software Outsourcing

   • Multisourcing allows leveraging the specific software development company expertise of various partners to enrich the quality of the software.
   • Advanced technologies like AI, Blockchain, and IoT demand specific skill sets for effective implementation.
   • Skilled specialists can navigate complex projects efficiently resulting in cost savings, reducing development time, and risks in the whole process.
   • Multisourcing offers more flexibility and control over the development process by allowing businesses to select the best provider for each project.

   Why Multisourcing Has Become a Key Trend in Software Outsourcing

   • The increasing complexity of software development tasks and projects requires a wider range of expertise than a single outsourcing company.
   • Multisourcing allows for the highest quality output by leveraging the strengths and specialties of multiple providers.
   • Outsourcing to multiple partners facilitates a competitive environment among providers that can lead to better service and innovation in the market.

   The trend of hiring specialized talent in software outsourcing is a strategic partnership when creating personalized and powerful solutions. Leveraging this trend not only ensures project success but also sets companies favourably in a competitive market.

7. Adoption of Cloud Computing

   With the technological revolution, businesses faced the issue of managing large amounts of data and ensuring its security and scalability. Traditional physical servers posed limitations on storage capacity, accessibility, and cost.

   How Cloud Computing is Transforming Outsourcing

   • Cloud technologies provide scalable solutions that adapt to your business’s changing needs. This flexibility was lacking with physical servers as they had fixed storage limits and couldn’t scale on demand.
   • Cloud computing ensures data availability and security which also offers encryption and disaster recovery solutions that are far better than traditional data storage.
   • Cloud development cuts down the need for extensive physical infrastructure, reducing both capital expenditure and operational costs.

   Why Cloud Computing Has Become a Key Outsourcing Trend

   • According to Gartner, the global public cloud services market is projected to grow by 17.5% in 2025. This data indicates the rising demand for cloud expertise in outsourcing.
   • The Flexera 2022 State of the Cloud Report highlights the rise among small to midsize businesses (SMBs). 52% of SMBs are investing more than $1.2 million in these services. This is a jump from 38% in the previous year. The trend is clear that SMBs are increasingly outsourcing their IT needs to cloud software outsourcing providers.

   This is the list of trends in software outsourcing trends. However, if you are confused between in-house and outsourcing, check our blog post on in-house vs outsourcing software development. By following this article, you get a complete understanding of each which helps you to choose the right one for your project. Let’s now check the FAQ sections to learn more information about nearshore or offshore outsourcing.

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   FAQ About Software Outsourcing Trends

   What are the benefits of outsourcing software development?

   Here is the list of benefits you get by outsourcing software development.

   • Cost savings
   • Access to excellent talent
   • Scalability and flexibility
   • Quality development
   • Focus on core business process

   How to choose the right outsourcing partner for your project

   Here are the steps you need to follow for choosing the right software development outsourcing partner.

   • Evaluate the expertise of the companies
   • Check the portfolio of outsourcing companies
   • Access the communication process of companies
   • Understand the pricing structure
   • Review the previously developed solutions
   • Check the industry expertise
   • Verify the security standards

   Ready to Leverage These Trends of Software Development Outsourcing?

   In this blog post, you have learned about the best software development outsourcing trends. By analyzing the reports of the software development outsourcing industry of Acclerance and Deloitte, we have listed these trends.

   Are you looking for software development outsourcing services? Let’s connect. We are one of the leading software development companies in Canada. So far, we have developed over 300 custom software solutions for industries like healthcare, fintech, supply chain management, and food & beverages.