IT Services Outsourcing Market Size, Share, and Trends 2024 to 2034

IT Services Outsourcing Market Size and Companies

The global IT services outsourcing market size was estimated at USD 525 billion in 2022 and it is expected to hit around USD 1,149.24 billion by 2032, poised to grow at a compound annual growth rate (CAGR) of 8.2% during the forecast period 2023 to 2032.

Key Takeaways

• The off-shore segment has garnered the highest revenue share of over 52% in 2022.
• The on-shore segment contributed a 48% revenue share in 2022.
• North America region accounted for 42% of revenue share in 2022.
• Asia Pacific region accounted for 36% of revenue share in 2022.

There has been no growth in the demand for various operations that will be helpful for the companies as the use of these services will provide them more time on performing their important tasks and will also be helpful in reducing the costs that are incurred on the operational activities. In order to provide better customer service and product projects that are customer centric there is a growing demand for IT services outsourcing. In the recent years the number of risks associated with the data has created more demand for outsourcing as it will be helpful in providing better security to the consumers. There is a good amount of demand from various industries which is driving the market growth period these industries shall have a dominant position in the market. BFSI sectors have a great demand for the outsourcing.

Apart from the bfsi sector the defense and the aerospace is also expected to have a good amount of demand in the coming years. The market is also expected to grow as it helps in providing portfolio consulting in the most effective manner. Constant innovations have been instrumental in providing many benefits for the growth of the industry. Most of the tedious tasks and the tasks that require a lot of time or outsourced and the outsourcing of these tasks has provided good amount of time for various industries to focus on their important functions. The human intellect is used for more productive purposes. The use of this service has been beneficial in the optimization of various resources and capacities. It happens to benefit the industry by providing flexibility. There is a great demand for these services as the work environment is undergoing transformation.

Growth Factors

• The IT services outsourcing market is expected to grow well due to an increased demand for enhanced digital transformation and effective digital solutions. 
• The great demand for and advanced infrastructure which shall be beneficial for the growth of the market in the coming years period.
• Increased use of Internet of things and the integration with various platforms will create more demand for the services during the forecast period.Along with the large businesses, the small and medium businesses are also adopting these services as there is a growth in the digitization.

Many market players are concentrating on providing solutions to the industries which shall be extremely beneficial in reducing the cost incurred by these industries especially due to the time taken for various operations. It will also be beneficial in reducing the overhead costs. Due to an increased number of the global capability centers especially in the Asia Pacific region will hamper the growth of the market during the forecast period.

Organizations or having an increased dependency on these services as they are helpful in providing applications which will be used in the industries. Increased use of the cloud services is a cost-effective option. It helps in providing better customer service and growth for the business. One of the most outsourced functions of the companies is that of maintenance. Companies are also outsourcing the work of application development the period the market has grown well in the past in the North American region as well as the European region. Most of the organizations are seeking with the maintenance and the usage of cloud services and these are demanded to a great extent from the IT companies. Most of the industries or the clients are demanding the use of artificial intelligence. There is also a growing popularity for automation as well as analytics. After the pandemic there has been a great demand for the cloud services and this is expected to grow well during the forecast period.

Growing popularity of the cloud services will provide great opportunities for the growth of the market in the coming years. Outsourcing of the developmental work and the maintenance work through the clients to various third parties are growing. Key market players are focusing on providing solutions in the most cost-effective manner. Most of the outsourcing is done to China and it happens to be a popular destination. The IT industry in China has provided many growth opportunities. This industry provides for the growth of the economy. Even though this nation is regarded as the cheap labor production outsourcing destination there will be a transformation as it will be your destination for outsourcing the innovative IT related services.

A lot of outsourced work is available in the Asia Pacific region and India is the top destination when it comes to outsourcing. The outsourcing business has been in this country for the last 25 years period and it is expected to have a dominating possession even during the forecast period. There is a great demand for the software developers. The availability of talent and skills in this region will drive the market growth during the forecast period. There is a greater demand for the software development services from the Asia Pacific region a new destination has emerged. And it happens to be a market for outsourcing which is Vietnam. This region has dominated the market due to the amount of transformation in this region. The competition in the countries of the Asia Pacific region is extremely intense period China and India will keep on dominating the market in the coming years. Rapid innovations and increased popularity of outsourcing will support the market in the coming years.

IT Services Outsourcing Market Scope

Service Insights

Depending upon the service provided the Application business segment is expected to dominate the market in the coming years. The application business segment has had a larger market share in the recent years. There is a growing demand for the designing and the implementation of the infrastructure, remote management of the infrastructure and there is a growing demand for cloud computing all these factors will drive the market growth during the forecast period. There has been a growth in the market due to the growing demand for the infrastructure that is off the wireless form and growing demand for the optimization of the network. Due to growing demand for automation there have been major changes in the functioning of various industries. Old methods are replaced with the automation in these industries.

The technology services segment will also grow well during the forecast period. It is expected to have a higher compound annual growth rate in the coming years. Due to a growing demand for the e-commerce platform and then increased use of the social media platforms there shall be a growth in the market. The availability of smartphones and the policies adopted by the government that have created a supportive environment for digital economy will drive the market growth in the coming years. The market is expected to grow well due to the entry of the new startups in the technology domain. Increased use of cloud services will also provide a growth opportunity in the coming years. Many organizations are outsourcing the work of the after sales services or the help desk services and this has been beneficial for the companies as it helps in reducing the cost incurred on these activities and also the amount of time that is spent on these activities. By doing so these organizations are increasing their focus on the overall business processes that are the core of the establishment.

Location Insights

On the basis of location, the offshore segment will grow well during the forecast period. This segment is expected to dominate the market in the coming years. As the developing nations have adopted outsourcing it has provided many cost benefits to the organizations. These organizations are outsourcing the work due to the cost benefits provided by doing so. Most of the nations in the Asia Pacific region are preferred by these organizations. The availability of talent in this region and the availability of low-cost human labor will drive the market growth in the coming years. There are many disadvantages of the offshore IT operations that are of the security as well as the risk associated with the intellectual properties.

Another disadvantage is that of the communication gap. But when it comes to the onshore IT operations all of these disadvantages disappear. There has been a shift and then increased preference towards the operations that are performed on shore. As the windows are available in the same time zone and same domain when it comes to the legalities the market is expected to grow well during the forecast period. The communication gap is overcome in this segment. It happens to be a more effective V of outsourcing the functions of a business. And this segment is expected to grow with a higher compound annual growth rate as compared to the offshore segment.

End User Insights

On the basis of the end user the BFSI Segment will dominate the market. This segment has had a larger market share in the past and it is expected to dominate the market in the coming years. This industry has invested a lot for creating automation. Increasing demand for cyber security has also boosted the market growth in this segment.

Apart from the increased use of outsourcing the services for this segment the retail and the ecommerce segment will also grow well in the coming years period the entry of various startups in the market will drive the market growth period the availability of various ecommerce platforms that have provided better options for purchases will also drive the market growth in the coming years. Constant advancements in the technology have been helpful in providing better experience to the consumers when it comes to shopping online. Integration of the virtual reality and augmented reality on these online platforms has played a very important role in boosting the demand.

IT Services Outsourcing Market Share, By Region, 2022 (%)

Geography Insights

North American region is expected to grow well during the forecast period. The revenue hold by this region is higher as compared to any other region across the globe. In the past the revenue old was the highest in the United States. Duo to the outsourcing of the communication systems, other operations of information technology the market is expected to grow well in this region. There has been the fastest growth in the Asia Pacific region in the recent years due to an increased number of partnerships between various organizations.

Key Market Developments

• Collaboration between Telenor Norway and Infosys in the year 2022 has been instrumental in transforming the supply chain and finance operations
• Collaboration between Microsoft and cognizant in the year 2022 has provided health care solutions which will be instrumental in providing enhanced care to the patients.

IT Services Outsourcing Market Companies

• Accenture
• Cognizant
• Capgemini
• Infosys
• IBM
• HP
• Oracle

Segments covered in the report

By Service

• Application
• Network operations
• Data center operations
• Help desk
• Emerging technology
• Others

By Location

• Offshore
• Onshore

By End User

• BFSI
• Healthcare
• Aerospace and defense
• Telecom and media

By Geography

• North America
• U.S.
• Canada
• Europe
• U.K.
• Germany
• France
• Asia-Pacific
• China
• India
• Japan
• South Korea
• Malaysia
• Philippines
• Latin America
• Brazil
• Rest of Latin America
• Middle East & Africa (MEA)