IT Services Outsourcing Market Size to Reach USD 937.67 billion by 2027

by | Published on Mar 3, 2022 | Business Process Outsourcing

Many businesses are relying on professional business process outsourcing services to outsource their IT requirements and thus focus on their core tasks and reduce the operational costs. According to a report from Grand View Research, the global IT services outsourcing market size was valued at USD 520.74 billion in 2019, is predicted to reach USD 937.67 billion by 2027. The market is expected to grow at a compound annual growth rate (CAGR) of 7.7% through the forecast period 2020 to 2027.

Key factors that are fuelling the demand for information technology services outsourcing are –

  • the growing vigilance regarding data security and customer-centricity in projects
  • ever-increasing demand for consultancy related projects
  • the growing need for proficiency in formulating and streamlining IT strategy, enterprise architecture advisory, portfolio consulting
  • rapid expansion of the e-commerce sector
  • usage of smartphones and social media
  • various governments’ emphasis on the digital economy
  • rise in technology-driven start-ups

The market is segmented on the basis of service, location, end use, and region.

By services, the market is further divided into Application, Emerging Technology, Data Center Operations, Helpdesk, Infrastructure Capacity, Managed Security Operations, Network Operations, and Others. As various industries are observing a shift in their processes, the emerging technology services segment is anticipated to witness the fastest CAGR during the forecast period. Owing to the growing demand and vigilance of data security, governance and compliance, risk management, and threat & vulnerability management, the Managed security operations segment is expected to experience a considerable growth rate.

By location, the market includes On-shore and Off-shore. The off-shore segment that accounted for a larger revenue share in 2019, is expected to witness considerable growth from 2020 to 2027. Offshoring IT operations to developing nations to avail cost benefits, mitigation of currency risks, and fulfilment of offset obligations have been driving this segment over decades. Onshoring IT operations can alleviate the hurdles of off-shore outsourcing such as indirect costs of quality lapse, and communication gap, and so, the on-shore segment is expected to register the highest CAGR from 2020 to 2027.

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Based on end-use, the market includes Aerospace & Defense, BFSI, Healthcare, Retail & E-commerce, Telecom & Media, and Others. The segment is expected to grow at a CAGR of over 8.0% in the forecast period. Owing to its significant investment in automation, AI-based conversational systems, and cybersecurity, the BFSI segment is predicted to continue its dominance from 2020 to 2027.

The retail & e-commerce segment is anticipated to witness the fastest CAGR over the forecast period, attributed to the numerous start-ups deploying an online shopping platform for customers and increasing deployment of AI, Virtual Reality (VR), and deep learning technologies in the online shopping sector.

Owing to the increasing adoption of autonomous systems, AI, sensors, and additive manufacturing in the sector, the aerospace & defence segment is projected to have substantial growth.  Deployment of IoT in this sector helps with unscheduled aircraft maintenance, sensory inputs, tail allocation, reliable & secure communications, and more, and such technological deployments need a skilled and experienced workforce, which fuels the market growth.

IT services in the healthcare sector are increasing due to a rise in the development of tailored software platforms and increasing usage of big data in the medical sector.  Most healthcare organizations outsource their IT tasks to ensure a secure exchange of information between providers, consumers, and quality monitors.

Region-wise, the market is divided into North America (The U.S., Canada), Europe (The U.K., Germany), Asia Pacific (China, Japan, India), Latin America (Brazil, Mexico), Middle East & Africa.

Asia Pacific is expected to emerge as the fastest-growing region over the forecast period owing to the increasing number of partnerships between the businesses and IT service providers. Due to cost-effectiveness, enhanced quality, time management, and availability of skilled developers, software development is one of the major IT tasks outsourced to the countries in this region. In North America, the U.S. accounted for the highest revenue share owing to the tenacious countrywide expansion in the IT sector and the growing deployment of information technology operations, enterprise software, data center systems, and communication systems.

In the Europe region, Germany is expected to witness considerable growth over the forecast period. Due to the proliferation of end-use industries and wide-scale deployment of IT, especially in oil & gas and coal & mineral mining sectors, Latin America and Middle East & Africa regions are predicted to register significant growth during the forecast period.

Some of the prominent players in the IT services outsourcing market are Accenture, IBM, Fujitsu, Hewlett Packard Enterprise Development LP, SAP SE, Capgemini, Cognizant, Infosys Limited, NTT Data Corporation, and Oracle. With the outsourcing services provided by a good business process outsourcing company, businesses can save time and money and better focus on core business tasks.

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