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.
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.
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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Non-IT related outsourcing
Business process outsourcing
Professional payment outsourcing
Infrastructure as a service and platform as a service
Interest in IT outsourcing is growing thanks to accelerating digitalization, the wider use of enterprise applications, and the increased popularity of home office setups. More than ever, IT oursourcing is being adopted by large and mid-sized companies across a range of industries from telecoms and finance to e-commerce and manufacturing. Most often, companies are looking to outsource IT support, infrastructure management, and business application operations. The main reason for outsourcing is the lack of IT experts. The shortage is caused by demographic issues and the high demand for skilled workers.
With digital transformation and increasing applications and extensions provided by IT, the segment of IT Outsourcing has been growing steadily in the past few years and is anticipated to witness significant growth in the upcoming years. This is leading to two developments: first, a higher demand for products and services that can be outsourced, and second, a lower threshold for outsourcing these products and services to companies located outside the buyers’ countries. Moreover, by outsourcing IT tasks (e.g., IT suppliers and software developers), enterprises are allowed 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 for savings more than ever.
The IT outsourcing sector is the biggest contributor to revenue in the IT Services market, with US$361 billion in 2021, and is projected to reach US$777.8 billion by 2028.
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.
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.
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.