In-house or outsourced IT development? Why offshore teams are taking over

According to figures reported by Statista the worldwide spending on IT outsourcing services has reached $288 billion. And survey conducted by Delloite in 2014 found that IT dominates 60% of the outsourcing market.

Contrary to what the featured photo of this article may have you believe, offshore teams don’t actually usually live on boats offshore… and all outsourcing is not offshore outsourcing (that’s just when the outsourced team is in another country than the client company). What is true is that regardless of which shore the outsourcing firm is tethered, the industry has been seeing a lot of growth.

This is because keeping a full staff of IT developers in-house can come with a few obstacles. IT solutions have become increasingly complex, and as a result, developers are becoming more and more specialized. Keeping an expert on staff specifically to handle security, front end, back end, mobile, UI, and many other possible areas, is really not cost effective when you may only use their expertise for a small, but critical, aspect of your project. And the negative consequences of skimping on any of the above-mentioned areas can be grave.

“Finding and maintaining the right skills to meet these threats can be a challenge. Turning to experts to supplement internal IT security skills is a wise choice for most organizations. Other areas growing quickly included disaster recovery and network operations. Like security, these are areas that are important, but require specialized skills that are not necessarily core to the business,” says David Wagner, vice president of research for Computer Economics.

In addition to access to specialized skills, outsourcing IT on average saves companies 10%-30% of expenditures on IT-related task budgets.

And companies have been taking notice. In a report by Data Centre Journal, large organizations have increased the percentage of their budgets spent on outsourcing from 6.3% to 8.7%. Small organizations are now spending 7.8% of their IT budget on outsourcing at the median this year, compared to 6.7% last year. And midsize companies have increased their spending at the median from 4.7% to 6.5%.

Though many people see IT development firms as an emerging trend, a recent report by Clutch ranked the top IT outsourcing companies from around the world, and few of the best-performing companies that made the list already have 20+ years experience. Those companies included ELEKS from Ukraine, PSL corp from Colombia, and Intetics from Belarus. PSL corp has been enjoying rapid growth as it has the added advantage of being close to the same time zone of the USA, ensuring timely workflow and feedback.

As the industry will undoubtedly grow to match the demand of so many companies planning to increase the amount of IT work they outsource, it will important for companies choosing an outsourcing firm to do their homework and stick to trusted companies with proven records of success.