5 Interesting IT Outsourcing Trends For 2022

Predictions for IT Outsourcing trends in 2022

You may now be starting your IT planning process for next year. This exercise can include picking the top strategic initiatives, determining the level of financial investment for growth, and assessing what IT projects should be implemented or scaled back. Based on what happened over the past 18 months, several factors and IT outsourcing trends have changed that will have a substantial impact on planning for next year. What follows are a few trends that should be considered as part of this process.

To start, the days of zero to one percent inflation rates are gone. Wages and prices have increased. This shift has caught some companies by surprise. Examples of multiple employees giving their notice in exchange for a 30-50% pay raise are not uncommon. Of particular note is the increase in wages in India. Staffing Industry Analysts (SIA) predict that by the end of 2021, the “IT/BPM (business process management) sector is likely to look at a 22% turnover rate. Between January and March, approximately 5-8% of full-time staff who were on-boarded left within the first 90 days.” Their prediction has come true, which is now having a big impact on IT outsourcing trends for 2022.

As you start your IT budgeting and planning exercise, consider these five IT outsourcing trends for a more resilient plan that will be more effective as you look to achieve next year’s planning objectives.

  1. Greater focus is now being placed on industry specialization – one trend that has emerged is the need for quick decisions and the ability to pivot to new distribution strategies, partnerships, and business models. We all know of examples where two businesses responded differently to a common threat, but only one performed well. Repeatedly, the winner was the company that responded faster to change. This realization has had an unintended effect: a greater focus on product, industry, and IT outsourcing provider specialization. Greater, in-depth knowledge of how an industry operates can provide far better insights on what possible long-term effects might be on sudden changes thrust upon your business. This difference can often make the difference between success or failure.
  2. Importance of project and staffing flexibility – today’s labor market has changed considerably over the past 24 months. While top programming, networking, or systems integration employees have always been difficult to hire and afford, today there is an acute shortage that has extended well beyond just the top performers. Any sort of IT outsourcing strategy is harder to execute. Wages in China, India, and other traditional outsourcing regions has increased substantially. Belarus is emerging as a new destination, with its IT outsourcing companies now comprising over 60% of all businesses, ranked third in its overall economy. Couple this supply challenge with an environment where IT projects are frequently changing via new business needs or scope creep, and the challenge of keeping staff or an outsourced IT team has never been harder.
  3. Cloud-based application development – those considering new software applications or systems integration should seriously consider what options exist on the cloud, to the point of avoiding starting any new on-premises applications. According to IT industry expert Gartner, they expect the public cloud services market will reach $397 billion by 2022. This reflects an expectation of 21% growth in 2021. Any time an industry experiences this type of growth, it will have ramifications on other accompanying sectors, as well as the ability to cost effectively perform IT outsourcing while getting the resource required for these types of projects.
  4. Robotics Process Automation (RPA) – an IT industry segment experiencing rapid growth is RPA. Think of this technology as a productivity tool that lets you configure scripts to activate keystrokes to automate a process. Today, the RPA market is sized at about $2 billion; this is expected to exceed $8 billion in 5 years, based on a forecast published by Statista. One of the driving factors is to improve resiliency  to change. The more processes that are automated, the easier it is to maintain performance in uncertain time. Future automation projects, such as data extraction programs, should be put high on your list of 2022 strategic imperative.

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  5. Cybersecurity & Governance – while security has always been a topic deemed important, the awareness of how costly poor security can be is a top-of-mind issue for a great many CEOs today. As one data point, President Biden just held a CEO Summit where cybersecurity was elevated as the “Core National Security Challenge,” as explained in this Wall Street Journal article. Cyberattacks on organizations world-wide are up 40% this year compared with the first 10 months of 2020, as quoted in another Wall Street Journal article. The recent escalation of ransomware and public infrastructure attacks has elevated this concern to a national level. Look for new initiatives to be passed by the current administration requiring greater oversight on cybersecurity programs, better governance of access controls to systems, and other related staffing requirements tied to security levels. Planning ahead can help to avoid future, unexpected projects that can be disruptive.

While other trends and factors will play an important role as you start to prioritize your 2022 strategic plan, the above factors will likely have a big impact. Decide your top initiatives within this framework for a plan that is more beneficial as we start the new year. Services that you can outsource with a known provider can help to overcome the deep staffing shortage now in effect. While change is constant, hopefully, the volume of change will start to settle down. Wishful thinking, or a foolish expectation? Only the future will tell.