IT Outsourcing - Worldwide

Worldwide

The IT Outsourcing market is expected to witness impressive growth worldwide.
According to projections, the market's revenue is set to reach a staggering €496.50bn by 2024.
This growth trajectory is expected to continue, with a projected compound annual growth rate (CAGR) of 8.31% from 2024 to 2029, resulting in a market volume of €740.10bn by 2029.
In terms of spend per employee, the average is projected to reach €139.50 in 2024.
This figure provides insight into the significant investments companies are willing to make in IT Outsourcing market services to ensure efficiency and cost-effectiveness.
When looking at global comparison, it is evident that the United States will dominate the market, generating the highest revenue of €181.10bn in 2024.
This highlights the country's strong position and influence in the IT Outsourcing market sector.
The IT Outsourcing market in India continues to thrive, with a highly skilled workforce and cost-effective solutions attracting global clients.

Key regions: Brazil, Italy, United States, China, Germany

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Analyst Opinion

The IT Outsourcing market has been rapidly growing worldwide in recent years, driven by a variety of factors such as cost reduction, access to skilled labor, and increased efficiency.

Customer preferences: Many companies are choosing to outsource their IT services to countries with a lower cost of living and lower labor costs. This allows them to save money while still receiving high-quality services. Additionally, companies are increasingly seeking out IT outsourcing providers that offer specialized services, such as cybersecurity or cloud computing.

Trends in the market: In India, the IT outsourcing market has been growing steadily due to the country's large pool of skilled IT professionals and lower labor costs. However, there has been a recent trend towards more onshoring as companies seek to reduce the risks associated with outsourcing to a foreign country. In China, the IT outsourcing market is also growing rapidly, driven by the country's large population and increasing technological capabilities. However, there are concerns about intellectual property theft and data security in the country.

Local special circumstances: In Latin America, the IT outsourcing market is growing due to the region's proximity to the United States and the availability of skilled labor. However, there are challenges such as language barriers and political instability in some countries. In Eastern Europe, the IT outsourcing market is also growing rapidly due to the region's highly skilled IT professionals and lower labor costs. However, there are concerns about data security and political instability in some countries.

Underlying macroeconomic factors: The growth of the IT outsourcing market is largely driven by macroeconomic factors such as globalization, technological advancements, and the increasing demand for specialized IT services. Additionally, the COVID-19 pandemic has accelerated the trend towards remote work and increased the demand for IT outsourcing services. However, there are also risks associated with outsourcing, such as data security and intellectual property theft, which companies must carefully consider before making a decision.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.