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February 17, 2021, New York, USA – The global IT outsourcing IT services market reached a promising valuation of $438 billion in 2019. The market is expected to witness promising growth during the 2021-2027 period, thanks to growing demand from the banking sector, among others for cloud migration. The growing demand for cloud adoption, increasing cost-effectiveness, and promising feature-driven automation will drive major growth for the global IT outsourcing service market. The rising demand for cloud adoption from large and small players alike will drive growth at a 5.3% CAGR during the 2021-2027 period.
The demand for more digitalization, convenient access, and personalization from consumers has pushed conventional sectors like BFSI to migrate to the cloud. Moreover, cloud adoption is also a major driver of growth for this sector as enables the sector to reduce costs to reach a mass consumer base at fraction of the previous costs. Furthermore, digitalization has allowed institutions like banks to outsource various services including mailing, payment processing, comprehensive security to trusted third-party providers. This has streamlined banking operations for many players in the banking sector to provide them with access to real-time data for consumer verification and be at the forefront of customer service. In 2019, IT outsourcing service giant Wipro announced that it had closed a USD300 million contract in partnership with ICICI bank. Such developments have become the order of the day in the global IT outsourcing service market.
Lowered Costs due to Cloud Adoption to Remain a Key Driver for Growth
The global IT outsourcing service market will likely witness major growth during the 2021-2027 period, thanks to the tremendous cost-effectiveness brought by cloud adoption. Many sectors, including small, and large players continue to migrate to the cloud as data management remains a major cost burden for companies. On the other hand, data security in crises like natural calamities, and regulations like GDPA continue to press companies for data protection. Furthermore, major technology companies including Microsoft, Amazon, Google have invested heavily in areas like cloud services. This has opened the cloud migration services arena with robust competition, innovation, and attractive pricing for various sectors. Moreover, companies like Google with billions of dollars in investments in datacentres also promise to open up new areas for growth for arenas like virtual gaming, or cloud-based gaming. Cloud-based gaming will bring costs of gaming down for millions of users around the world while opening access for new game developers to a cost-effective, and open world. The lack of compatibility among different cloud solutions from different providers remains a barrier to growth. However, the growth of hybrid cloud solutions from key players like IBM promise a new arena for growth for players in the global IT outsourcing service market.
Rising Demand for Outsourcing Activities from Private Corporations to Drive Growth
According to the United Nations estimate, the NEM or non-equity modes of investment including contract outsourcing amounted to $2 trillion in sales in 2010. Furthermore, since then, the growth in the outsourcing market has exploded, thanks to growing cost-efficiency, and increased availability of outsourcing partners across the world. According to the Federation of American Scientists, the manufacturing sector witnessed a slow decline during the 90s, and 2000. The decline was largely caused by the declining gross product of US-based parent companies, which caused their gross output to fall from 53% to 39.2 in 2010. The rise in outsourcing among US-based parent companies, their product-based output rose to 45.7%, thanks to a major economic recovery. Outsourcing remains an inevitable premise for US-based companies, as low-costs of manual labor, increased advancements in technology, and growing demand for cheap US products globally remains a key driver of growth for multinationals based in the US.
Demand from the Healthcare Sector to Offer New Opportunities for Growth
The healthcare sector continues to undergo major technological advancements in the digital era, thanks to rising demand for cost-cutting, and improvements in areas like patient care management. Patient care management remained a key area for improvement as in countries like the US, the demand for tele pharmacy promises a robust application, thanks to an incessant need. The rural area of the United States houses a large population of relatively sicker patients, with unequal access. Moreover, agencies like Medicaid have associated funding with improvements in healthcare and recommended digitalization, access to health practitioners through digital portals. The rising demand for digital improvements in healthcare, growing funding for digitalization, and cost-effectiveness of outsourcing solutions will drive major growth for the global IT outsourcing service market in the near future.
High-Level of Sophistication in Delivery Models to Drive Growth
The rising demand for outsourcing has led to tremendous sophistication in delivery from global IT giants like Capgemini, Accenture, TCS, among others. Today, the global consulting firms offer a one-stop solution for all services business process outsourcing, application development, consulting, capacity planning, hardware sizing, enterprise software, software management, payment processing, and technology education services. Moreover, the level of sophistication in service models has also increased. Multinational outsourcing service providers also offer risk-sharing agreements to reduce the burden of operating in unfamiliar waters in new regions and meet regulatory requirements. The global IT outsourcing service market will also witness the emergence of new technologies like IoT, 5G, and automation which will drive further growth in the near future. The automation trend is already taking key sectors like manufacturing by storm. This technology remains essentials for parent companies to engage in cost-effective manufacturing, and develop next-gen technologies like IoT devices. The growing shift towards Industry 4.0, and rising demand for IT operations in completely new sectors like BFSI, healthcare promise tremendous opportunities for growth in the global IT outsourcing service market.
The Global IT Outsourcing Service Market Report is Segmented as Follows:
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