IT Outsourcing Market Size
| Study Period | 2019 - 2029 |
| Market Size (2024) | USD 617.69 Billion |
| Market Size (2029) | USD 806.53 Billion |
| CAGR (2024 - 2029) | 5.48 % |
| Fastest Growing Market | Asia Pacific |
| Largest Market | Asia Pacific |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
IT Outsourcing Market Analysis
The IT Outsourcing Market size is estimated at USD 617.69 billion in 2024, and is expected to reach USD 806.53 billion by 2029, growing at a CAGR of 5.48% during the forecast period (2024-2029).
- Information technology has become a competitive edge for most organizations. IT outsourcing has become more than a simple cost-reduction process with cloud migrations and cloud service options. Therefore, this new form is mainly driven by organizational motivations in terms of customer experience, business growth, and competitive disruption.
- More importantly, such a rise in preference among the newer and smaller organizations has led the key vendors of the market to increasingly concentrate on finding a way to integrate the offshore team with the on-site. Another critical aspect driven by small-scale players is the agility in vendor offerings, which refers to the time-to-market.
- There is a rise in demand by businesses to streamline business operations and focus on crucial activities that are revenue drivers, and outsource IT services for secure IT infrastructure enabling data protection. The businesses deploy market players' expertise in IT services to reduce organization-wide data-related risks. The BFSI sector is driving the market since recruiting specialists with advanced skills is time-consuming. To reduce the overall cost involved, the companies invest in outsourcing solutions.
- However, the lack of data security in cloud and server-based services is hindering the market's growth. Cloud-based services pose many specific security issues and challenges. Data is usually stored with a third-party provider and can be accessed over the internet in the cloud. This indicates that visibility and control over that data are limited. Nevertheless, growing demand for efficiency and scalable infrastructure and increasing cloud migration are driving the market.
IT Outsourcing Market Trends
BFSI to be the Largest End-user Vertical
- Banking, financial services, and insurance (BFSI) is one of the major end-user verticals experiencing significant change in technology adoption, mainly due to the conditions brought on by the pandemic and the evolving competitive landscape.
- Financial organizations are increasingly outsourcing their process and services to third parties. Banks are capable of outsourcing everything from mailing campaigns to payment processing. Banks can only survive and attract customers with a robust and comprehensive in-house IT department or trusted outside partners. For instance, in March 2023, Orion Innovation, a digital and product development firm, announced the acquisition of Banktech Software Services Ltd, a banking implementation partner for financial institutions that will complement Orion’s financial services for expertise, open banking solutions, and implementation capabilities to Banktech.
- The BFSI industry is also shifting toward the cloud, which presents new market opportunities. According to a recent survey by Google Cloud, around 41.4% of global tech and business leaders planned to invest in cloud-based services to manage their workloads. Also, as per data by Flexera software, there was growth in IT spending in 2022 and 2023, and the software industry experienced 18% spending, followed by cloud services with 16% spending in 2023.
- Modern customers need more personalized and streamlined access to banks' services. The transition to omnichannel platforms, which provide seamless access for all devices, can be carried out by IT outsourcers. Moreover, such platforms facilitate real-time data collection and analysis so that financial institutions can improve customers' experience. Hence, such developments are driving IT outsourcing in the banks.
- Overall, the BFSI industry's demand for IT outsourcing services will be fueled by the need for advanced cybersecurity, digital transformation, growing regulatory compliance, and innovative solutions to meet evolving customer expectations and industry trends.
Asia-Pacific is Expected to Dominate the Market
- China is one of the significant outsourcing destinations in the Asia-Pacific. The outsourcing industry considers benefits that the majority of the companies in the United States find attractive. Reduction in development costs plays a critical role in retaining the actual benefits of outsourcing.
- China has made significant efforts to transition from (cheap) employment manufacturing to high-end industrial production through digitization and industrialization. According to data from the Ministry of Commerce, China’s outsourcing industry grew in 2023. The firms signed outsourcing contracts of USD 404 billion, a 17.6% growth from last year.
- India is a considerably mature global IT outsourcing destination with a vast range of options. IT outsourcing companies in the country are rapidly expanding operations worldwide due to an increasing demand for skilled software developers. The cost aspect and talented skill pool have played a critical role in ensuring the nation's dominance in the market.
- In Japan, based on recent technological advancements in IT, the scope of IT outsourcing in the country's business sector has expanded to include cloud computing, data protection, and cybersecurity. Owing to the ability to provide business functionality without the need for substantial infrastructure investment, cloud-computing services are increasingly being utilized.
- Overall, the countries in the region are expected to gain significantly in the coming years as the market continues to develop. In addition, the data center buildings in the region have fueled a significant demand. Also, with the data center market on the verge of maturing, significant revenues in upgrading infrastructure have been poised to develop IT outsourcing in the region.
IT Outsourcing Industry Overview
The IT outsourcing market exhibits significant fragmentation, featuring key industry players such as IBM Corporation, DXC Technologies, Accenture PLC, NTT Corporation, and Infosys Limited. These market participants employ various strategies, such as forming partnerships and pursuing acquisitions, to bolster their product portfolios and establish sustainable competitive advantages.
- In November 2023, DXC Technology, a global technology service company, and ServiceNow, a digital workflow company, announced a strategic partnership to transform customer service and workflow management globally. They aim to integrate ServiceNow's advanced analytics and AI from its ITSM Pro and process mining solutions into DXC platform X to drive innovation for joint customers.
- In July 2023, NTT DATA (global digital business and IT service leader) announced the launch of an outsourcing service for security management to prevent cyber attack incidents and minimize damage when incidents occur. The service was launched in Japan in July 2023 and expanded worldwide within the fiscal year (March 2024).
- In June 2023, Infosys acquired Danske Bank's IT operation in India, part of an IT outsourcing contract worth USD 454 million over five years, to focus on its digital transformation. Through this contract, the company introduced generative artificial intelligence into the services.
IT Outsourcing Market Leaders
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IBM Corporation
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DXC Technologies
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Accenture PLC
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NTT Corporation
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Infosys Limited
*Disclaimer: Major Players sorted in no particular order
IT Outsourcing Market News
- January 2024: DashDevs, a software development company with offices in the United States, the United Kingdom, and Europe, announced the acquisition of iTomych Studio (a Ukrainian outsourcing company). This strategic collaboration will focus on fintech innovation and expanding DashDevs' presence globally. It aims to create a shared culture to enhance service quality and optimization of processes.
- June 2023: Grant Thorton in Poland announced a crucial step in strengthening its digital services. The company joined hands with IT Omega, a provider of IT outsourcing services. GT is a strategic investor in the company, taking 80% of the ownership. Through this, it planned to expand the range of digital services to complement audit, advisory, and outsourcing services.
- May 2023: TDCX officially unveiled its plans to expand its facility in Sao Paulo, Brazil. The company is a leading provider of digital customer experience (CX) solutions for technology and blue-chip enterprises. With the advent of cutting-edge technologies, including generative artificial intelligence (AI), TDCX is poised to revolutionize the CX landscape in various domains. These advancements empower service providers like TDCX to further automate their operations, offer enhanced predictive capabilities through data analysis, and optimize procedures for their valued clients.
IT Outsourcing Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.2.1 Growing Demand for Efficiency and Scalable IT Infrastructure
4.2.2 Organizations are Increasingly Focusing on IT as a means to Gain Differentiation by Relying on Outsourced Vendors
4.2.3 Ongoing Migration Toward the Cloud and Adoption of Virtualized Infrastructure
4.3 Market Challenges
4.3.1 Fragmented Nature of the Market And Growing Incidence of Data Breaches
4.3.2 Dynamic Needs of IT Structure Impacts the Cost of Customization for End Users
4.4 Impact of COVID-19 on the IT Outsourcing Industry
4.5 Industry Attractiveness - Porter's Five Forces Analysis
4.5.1 Threat of New Entrants
4.5.2 Bargaining Power of Buyers
4.5.3 Bargaining Power of Suppliers
4.5.4 Threat of Substitute Products
4.5.5 Intensity of Competitive Rivalry
5. MARKET ANALYSIS
5.1 Trends Related to Onshoring and Offshoring
5.2 Breakdown of Outsourcing Industry - BPO vs IT-based Outsourcing
5.3 Impact of the Ongoing Commodification of IT Solutions
5.4 Analysis of IT Outsourcing and Managed Service Industry
5.5 Breakdown of the Major IT Outsourcing Segments - Application and Infrastructure
5.6 Impact of Digital Transformation and Emergence of "As-a-Service" Model
6. MARKET SEGMENTATION
6.1 By Organization Size
6.1.1 Small and Medium Enterprises
6.1.2 Large Enterprises
6.2 By End-user Vertical
6.2.1 BFSI
6.2.2 Healthcare
6.2.3 Media and Telecommunications
6.2.4 Retail and E-commerce
6.2.5 Manufacturing
6.2.6 Other End-user verticals
6.3 By Geography
6.3.1 North America
6.3.1.1 United States
6.3.1.2 Canada
6.3.2 Europe
6.3.2.1 United Kingdom
6.3.2.2 Germany
6.3.2.3 France
6.3.2.4 Italy
6.3.2.5 Spain
6.3.2.6 Poland
6.3.2.7 Belgium
6.3.2.8 Netherlands
6.3.2.9 Luxembourg
6.3.2.10 Sweden
6.3.2.11 Denmark
6.3.2.12 Norway
6.3.2.13 Finland
6.3.2.14 Iceland
6.3.3 Asia
6.3.3.1 China
6.3.3.2 India
6.3.3.3 Japan
6.3.3.4 Indonesia
6.3.3.5 Vietnam
6.3.3.6 Malaysia
6.3.3.7 South Korea
6.3.4 Latin America
6.3.4.1 Brazil
6.3.4.2 Mexico
6.3.4.3 Colombia
6.3.5 Middle East and Africa
6.3.5.1 GCC
6.3.5.2 South Africa
6.3.5.3 Turkey
7. COMPETITIVE LANDSCAPE
7.1 Company Profiles*
7.1.1 IBM Corporation
7.1.2 DXC Technologies
7.1.3 Accenture PLC
7.1.4 NTT Corporation
7.1.5 Infosys Limited
7.1.6 Tata Consultancy Services
7.1.7 Cognizant Technology Solutions Corporation
7.1.8 Capgemini SE
7.1.9 Wipro Limited
7.1.10 Andela Inc.
7.1.11 Wns Holding Ltd
7.1.12 Pointwest Technologies
7.1.13 ATOS SE
7.1.14 Amadeus IT Group
7.1.15 Specialist Computer Centres (SCC)
7.1.16 HCL Technologies Ltd
8. RELATIVE RANKING ANALYSIS OF THE MAJOR IT OUTSOURCING COMPANIES OPERATING WORLDWIDE
9. MARKET OUTLOOK
IT Outsourcing Industry Segmentation
IT outsourcing involves a contractual arrangement where IT service providers take complete ownership and control over the client's IT infrastructure. The growing emphasis on operational efficiency and cost-effectiveness led to increased demand for outsourcing to offshore companies. The study tracks the regional and country-level market demand for IT outsourcing and provides detailed coverage of the major end-user trends affecting adoption.
The IT outsourcing market is segmented by organization size (small and medium enterprises and large enterprises), end-user vertical (BFSI, healthcare, media and telecommunication, retail and e-commerce, manufacturing, and other end-user verticals), by geography (North America (United States and Canada), Europe (United Kingdom, Germany, France, Italy, Spain, The Nordics, Benelux, Poland, and Rest of Europe), Asia-Pacific (China, India, Japan, Indonesia, Vietnam, Malaysia, South Korea, and Rest of Asia-Pacific), Latin America (Brazil, Mexico, Colombia, and Rest of Latin America), Middle East and Africa (GCC, South Africa, Turkey, and Rest of Middle East and Africa)).
The market sizes and forecasts are provided in USD for all the above segments.
| By Organization Size | |
| Small and Medium Enterprises | |
| Large Enterprises |
| By End-user Vertical | |
| BFSI | |
| Healthcare | |
| Media and Telecommunications | |
| Retail and E-commerce | |
| Manufacturing | |
| Other End-user verticals |
| By Geography | ||||||||||||||||
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IT Outsourcing Market Research FAQs
How big is the IT Outsourcing Market?
The IT Outsourcing Market size is expected to reach USD 617.69 billion in 2024 and grow at a CAGR of 5.48% to reach USD 806.53 billion by 2029.
What is the current IT Outsourcing Market size?
In 2024, the IT Outsourcing Market size is expected to reach USD 617.69 billion.
Who are the key players in IT Outsourcing Market?
IBM Corporation, DXC Technologies, Accenture PLC, NTT Corporation and Infosys Limited are the major companies operating in the IT Outsourcing Market.
Which is the fastest growing region in IT Outsourcing Market?
Asia Pacific is estimated to grow at the highest CAGR over the forecast period (2024-2029).
Which region has the biggest share in IT Outsourcing Market?
In 2024, the Asia Pacific accounts for the largest market share in IT Outsourcing Market.
What years does this IT Outsourcing Market cover, and what was the market size in 2023?
In 2023, the IT Outsourcing Market size was estimated at USD 583.84 billion. The report covers the IT Outsourcing Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the IT Outsourcing Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
What are the key factors driving IT Outsourcing Market growth?
Key factors driving the IT Outsourcing Market are: a) Cost reduction b) Access to specialized skills c) Improved efficiency and scalability d) Focus on core business functions, and e) Technological advancements
What are the key factors driving IT Outsourcing Market growth?
Key factors driving the IT Outsourcing Market are: a) Cost reduction b) Access to specialized skills c) Improved efficiency and scalability d) Focus on core business functions, and e) Technological advancements
IT Outsourcing Industry Report
The global IT services outsourcing market is witnessing remarkable growth, propelled by businesses aiming to concentrate on their core operations while minimizing operational expenses. This surge is prominent in sectors like aerospace & defense, BFSI, healthcare, retail & e-commerce, and telecom & media, which are heavily investing in IT outsourcing to bolster data security, customer focus, and digital transformation. The adoption of cloud computing plays a crucial role, enabling SMEs to automate and optimize business processes. Innovations in operational and pricing models, including multi-sourcing strategies, are being adopted to stay competitive and manage operational risks effectively. The push towards digitalization necessitates upgrading IT infrastructure, with a noticeable shift towards offshoring for cost advantages and onshoring to reduce offshoring-related indirect costs. The market, segmented by services, location, and end-use, is experiencing significant growth across various regions and industries, underscoring the reliance on IT outsourcing solutions to meet the dynamic business and technological landscape. Mordor Intelligence™ Industry Reports offer a comprehensive analysis and forecast outlook, available as a free report PDF download.
IT Outsourcing Market Report Snapshots
