An Allied Market Research report reveals that the global application outsourcing industry could reach $244.5 billion by 2032, growing at an 8.6% compound annual growth rate (CAGR). Innovation, business process expansion, and the increasing adoption of digital transformation and advanced code analysis software drive market growth.
Large enterprises in the information technology (IT) and telecom sectors dominate the global application outsourcing market, particularly in North America. These firms have high transaction volumes and large budgets, making outsourcing viable. They also require sophisticated apps for risk management, cost optimization, and regulatory compliance.
What is application outsourcing?
Application outsourcing involves contracting with external providers to create, develop, or enhance software tailored to the company’s unique requirements. This approach also includes vendor evaluation to ensure the software’s functionalities and usability align with corporate needs and conform to superior infrastructure standards.
Many companies opt for this strategy to gain a competitive edge, adapt to disruptive technologies, and overcome application development and data management challenges. Commonly outsourced tasks include software development, application management, maintenance of legacy systems, and remote programming.
Challenges and opportunities
The report identifies two main challenges facing the application outsourcing market:
- Shortage of skilled experts. Some regions need more qualified application development and maintenance professionals.
- Lack of awareness. Many organizations have misconceptions about application outsourcing or are unaware of its benefits.
Despite these challenges, the outlook for the application outsourcing market remains positive with the increasing IT infrastructure investments in developing countries.
For example, Sri Lanka has become a top outsourcing destination after investing in cutting-edge technologies and infrastructure, such as automation, data analytics, 4G-LTE networks, and artificial intelligence (AI). These developments have greatly enhanced efficiency, connection, and reliability, attracting international companies to invest.
As companies seek ways to enhance their efficiency and competitiveness, the demand for application outsourcing services is expected to increase.
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Gartner. (n.d.). Application Outsourcing. Retrieved from https://www.gartner.com/en/information-technology/glossary/application-outsourcing
