The IT sector is one area that has witnessed significant growth in outsourcing. This article will cover the IT outsourcing statistics from 2018 that were published by Computer Economics.
The study was carried out based on 131 IT organizations of varying sizes. It looked at 10 of the most popular IT outsourcing functions like application development and maintenance. The first thing the report highlighted was the growth in the IT outsourcing budgets had risen year after year to 11.9% in 2017, up from 10.6% in 2016. The largest increase in budgets was seen in large and midsize organizations. Large organizations (that typically spend more than $20 million) increased their budgets from 6.3% in 2016 to 8.7% in 2017. Midsize organizations (with budgets between $6 and $19 million went from 4.7% to 6.5% in the same timeframe.
Computer Economics Definition of IT Outsourcing
IT outsourcing is “contracting an onshore, nearshore or offshore service provider to perform an IT function that is commonly performed in-house.” As with all industries, IT outsourcing has certain trends. Application development and maintenance are two areas that are most often outsourced. Another trend is outsourcing functions that will improve the service of the company such as IT security, disaster recovery, and database administration.
Why Do Companies Choose to Outsource?
One of the first advantages of IT outsourcing is increased operational flexibility. Companies are able to outsource projects or parts of projects to experts with a diverse range of knowledge. It is an ideal solution for companies who need to increase their in-house team but don’t want to hire full-time employees. Companies are able to lower their overheads and save capital investment. Finally, outsourcing can be used when there is a shortage of skilled labour in the local area.
Top 10 Outsourced IT Functions
- Application Development- using a service provider to develop a new system or improve current systems
- Application Maintenance- when a service provider becomes responsible for the maintenance of IT systems
- Data Center Operations- either alone or together with in-house staff, the service provider operates the data centre
- Database Admin- the service provider tracks and tunes databases at the physical or logical levels
- Desktop Support- PCs are installed and/or maintained by the service provider
- Disaster Recovery- the service provider will control off-site data storage, recovery data centres, redundant systems/networks in the case of any crisis
- Help Desk- the service provider will be in charge of phone or electronic response to end-user incidents
- IT Security- security assessments, penetration testing, and managed security services are some of the security functions a service provider could carry out
- Network operations- the service provider will assume the control of part or all of the data network operations and monitoring
- Web Hosting and Operations- a corporate or e-commerce system is hosted, operated and maintained by the service provider
There is no doubt that more and more companies are turning to IT outsourcing and this could be because of the increasing amount of work companies are dealing with and not having the in-house staff to handle it. As cloud-based technology gains popularity, it is becoming easier for companies to hand over their data to outsourcing firms. At the same time, public cloud IaaS and SaaS are often easier to maintain than in-house infrastructures.
Central and Eastern Europe are two favourite locations for IT outsourcing, in particular, Ukraine. Ukraine has the largest and fastest-growing number of IT specialists in this area and it is estimated that the IT engineering sector will double to more than 200,000 by 2020. This is a great location to begin your search for an IT outsourcing provider in order for your company to meet its objectives.