IT Outsourcing - Estonia

Estonia

Revenue in the IT Outsourcing market is projected to reach US$102.30m in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 9.12%, resulting in a market volume of US$158.30m by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$135.50 in 2024.
In global comparison, most revenue will be generated in the United States (US$197.30bn in 2024).

Key regions: Netherlands, United States, Japan, Germany, Italy

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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Market

Region

Region comparison

Currency

Analyst Opinion

Estonia, a small country in Northern Europe, has been gaining attention in the IT outsourcing market in recent years.

Customer preferences: One reason for this is the growing demand for nearshoring options in Europe, as companies seek to reduce costs while maintaining a high level of quality and communication. Estonia's proximity to major European markets, such as Germany and the Nordic countries, makes it an attractive option for companies looking to outsource their IT needs.

Trends in the market: Another trend in the IT outsourcing market in Estonia is the rise of startups and small businesses. With a highly educated workforce and a supportive government, Estonia has become a hub for innovation and entrepreneurship. As these startups grow, they often turn to outsourcing as a way to scale their operations while keeping costs low.

Local special circumstances: Estonia's unique digital infrastructure is also a factor in the growth of the IT outsourcing market. The country has a highly developed e-government system, with digital signatures and online voting, which has created a culture of technological innovation and efficiency. This digital mindset extends to the IT outsourcing industry, with many companies offering cutting-edge solutions in areas such as blockchain and cybersecurity.

Underlying macroeconomic factors: Finally, Estonia's strong economic performance and stable political environment have made it an attractive destination for foreign investment. The country has a low corporate tax rate and a business-friendly environment, which has helped to attract multinational companies to set up operations in Estonia. This, in turn, has created opportunities for local IT outsourcing companies to partner with these companies and provide them with high-quality services at a competitive price.In conclusion, the IT outsourcing market in Estonia is growing due to a combination of factors, including its proximity to major European markets, the rise of startups and small businesses, its unique digital infrastructure, and its strong economic and political environment. As companies continue to seek cost-effective and high-quality IT solutions, Estonia is likely to remain a key player in the IT outsourcing market in Europe.

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.