Even by the standards of an already dynamic industry, the IT outsourcing market has undergone unprecedented transformation since 2020. On the one hand, AI and automation have enabled work to become more sophisticated and globally distributed than ever before. But simultaneously, businesses are increasingly prioritizing nearshoring and "friendshoring" to reduce supply chain risks and improve collaboration.
As a result, the global IT outsourcing industry is experiencing intense evolution around everything from AI-driven development processes to specialised custom software solutions that require deep domain expertise. For organizations evaluating partnerships, selecting a custom software development services company with proven nearshore capabilities and AI expertise has become a strategic imperative rather than a tactical procurement decision. The shift from pure cost reduction to value-based partnerships has fundamentally changed how companies approach outsourcing decisions. Understanding this complex landscape of rapid technological advancement, geopolitical considerations, and emerging partnership models requires a comprehensive analysis of the major 2025 IT outsourcing trends & statistics.
The current state of IT outsourcing trends
Let’s begin with an exploration of where the IT outsourcing industry stands today. Overall, outsourcing remains a cornerstone of modern business with 66% of U.S. businesses outsourcing at least one full department. With such popularity, it’s hardly surprising that the global market for IT outsourcing has reached $66.5 billion dollars annually.
Software outsourcing in particular is estimated to continue its robust growth of 7.54% CAGR from 2023-7, making up around half of the total global outsourcing market. This is hardly surprising considering the growing importance of software in nearly every aspect of modern business.
However, while these strong growth rates look set to continue, competition is rising as well. More and more countries around the world are striving to develop IT outsourcing industries, leading to greater competition.
Challenges and evolution
Considering all of the major trends affecting software outsourcing as a whole, there are clearly great risks and opportunities. As competition increases, it is only becoming more important for software outsourcing firms to stay on top of current trends. Because in today’s landscape, if they are unable to provide a particular service, it’s likely someone else will.
But what are the top IT outsourcing trends firms need to be aware of? Let's dive right in.
Factors that affect software outsourcing trends
Before we look at the software outsourcing trends defining the industry in 2024, it’s worth understanding the underlying factors driving them.
The first is simply that software itself has never been more important. More and more processes that used to be done manually or with simpler off-the-shelf software solutions now rely on complex custom-build tools.
That increasing reliance on software also means that software is more important for businesses seeking a competitive advantage. With marketing becoming increasingly global and competition increasing as a result, there’s ever-greater pressure to find ways to outcompete rivals. Today’s software offers more ways to do that than ever, assuming you can find the right developer to build the right software.
At the same time, the software being built and used itself is more complex. In addition to increasing needs from software itself, there’s a need for it to communicate with a wider array of other tools via APIs. This increased complexity also translates into greater security challenges as it means there are more potential vulnerabilities that may be targeted by malicious actors.
Then there’s the issue of digital transformation, a more continuous approach to evolving how a company operates. Driven by data and technology, digital transformation involves a total rethinking of how organizations function. In particular, abandoning the idea that any particular transformation is going to have a discrete beginning and end.
Lastly is the factor around how software is built in the first place. That same complexity driving so many other changes also means that software developers need to use Agile practices to adapt during the development process. It’s no longer possible to simply assume the customer’s software needs will remain constant throughout the process.
Top 7 IT Outsourcing Trends for 2025
While there are myriad forces affecting software outsourcing trends in 2025, these are the 7 that are truly reshaping the industry. Whether you’re currently looking to find the right custom software development company or just want to understand the shifting landscape, it’s vital to be aware of them all.
1. Changing Contracts
While in the past, IT outsourcing contracts were more narrowly focused on deliverables, timetables, and budget. However, this failed to produce the results customers wanted far too often. That’s why this basic form of contract is changing resulting in changing IT outsourcing trends in preferred contract types. Businesses now want SLAs (service-level agreements) that put greater emphasis on business value and impact that software will have on key deliverables like revenue or customer satisfaction.
In some cases, this even takes the form of “gain share” models that provide direct payments based on revenue gained from the software. In other words, there’s a greater emphasis on using contracts to create alignment between customers and providers.
For this reason, it’s a new IT outsourcing trend that many providers are embracing. The benefits of aligning these interests are significant, as it increases the likelihood that development teams deliver real value to their customers. But for software outsourcing companies, this means rethinking their approach to development and how they work with their clients.
Read next: The 7 Best Principles of Sustainable Software Development
2. Greater Automation
More and more businesses are looking to outsource the production of software designed to automate repetitive tasks. This is referred to as Robotic Process Automation (RPA) and involves the creation of bots capable of mimicking a wide range of human actions.
This can be something as simple as copying and pasting files from one place to another or a more complex process with many steps, like handling receivables and payables in financial software. The main limitation is that the process must be predictable and rules-based.
When used to replace manual work done by even low-skilled workers, this automation can create significant savings. This is because it can increase speed, decrease errors, and low the cost of performing the task.
3. Artificial Intelligence (AI) & Machine Learning (ML)
Artificial intelligence and machine learning have fundamentally reshaped software outsourcing in 2025, extending far beyond traditional automation into complex problem-solving domains. 85% of businesses are now using or evaluating AI & ML uses, marking a shift from experimental adoption to mainstream integration. Modern AI applications encompass sophisticated chatbot interfaces, advanced data analytics platforms, and intelligent decision-support systems that can process multiple data types simultaneously.
Read next: Top 5 AI Agent Use Cases to Reduce Operational Costs
The driving force behind this AI outsourcing boom stems from a significant talent shortage. A survey by Deloitte indicated that 52% of respondents choose outsourcing to cope with their skill gaps in AI. while nearly a quarter of employees are searching for expertise in AI, Machine Learning, and Deep Learning, at 24.6%. This scarcity has created a competitive advantage for outsourcing providers who can demonstrate genuine AI capabilities.
4. Rising Popularity of Nearshoring
Outsourcing has been common practice for decades, though many of its downsides have been felt with increasing urgency in recent years. However, recent IT outsourcing trends point to a significant Eastern European growth, with Poland (12.12%), Ukraine (10.37%), Romania (8.74%), and Bulgaria (8%) collectively representing nearly 40% of the global market share.
This closer working relationship highlights the importance of things like working styles, culture, and language. These trends have fueled a greater popularity for nearshoring, working with partners in countries that are physically and culturally closer than traditional outsourcing locations.
Read next: 2025 Software Outsourcing Market Size By Country
For example, a Paris-based company might hire a software development company in Bulgaria instead of one in India. Working within the EU makes doing business easier, the development firm may have a french-speaking team, and any in-person meetings are far easier to arrange.
There will always be tradeoffs when comparing nearshoring to offshoring. But current trends show that more and more organizations see the benefits of nearshoring as vital, making it a major software outsourcing trend to follow. You can read more about the topic in our Nearshore Software Development Guide!
5. Cloud-Based IT Outsourcing
The popularity of cloud computing has been rising rapidly for years because it enables companies to outsource more functions more effectively. So in addition to outsourcing the development of software, cloud systems can subsequently make that software far more flexible, scalable, and adaptable.
This is done by utilizing servers you rent storage or computing capacity on, enabling you to pay for only what you use. For organizations that don’t want to worry about constantly upgrading physical server infrastructure, this flexibility is an enormous benefit.
But cloud computing can be complex, which is why software outsourcing firms often specialise in designing custom cloud-based solutions. By integrating cloud-solutions into the software from its inception, it becomes easier to use this powerful tool to its full effect. The popularity of this option is clear in the data, which predicts cloud-based software outsourcing to reach $141.2 billion dollars by 2027.
Read next: Multicloud Strategy: 10 Best Examples + Pros & Cons
6. Multi-Vendor Outsourcing
One overarching trend that should be clear by now is that the software companies want to outsource now is more complex than ever before. As a result, the challenge of finding vendors with the skills, expertise, scale, etc. to handle these complex needs has never been more challenging.
This has given rise to the multi-vendor IT outsourcing trend. With this type of software outsourcing, companies hire multiple service providers to work together and develop a particular software solution. The advantage is that this makes it easier to access the exact skills, scale, and expertise you need.
Multi-vendor outsourcing is also used as a risk mitigation strategy as it reduces their reliability on any single provider. This approach also enhances flexibility by increasing the likelihood that one provider will be able to handle any adjustments in the project needs as it progresses. The table below outline the driving factors behind the decision why companies choose to engage in IT outsourcing business relationships. As we can see improved talent access ranks as a top reason, followed by rising customer demands that can't be dealt with in-house. Cost reduction, contrary to popular beliefs, ranks at place three for the surveyed companies by Deloitte.
7. Cybersecurity and Data Privacy
Regulations and consumer expectations around digital security of all types have increased markedly in recent years. The potential for everything from reputational damage to the loss of crucial proprietary information carry enormous risks.
Thus, software outsourcing companies have placed an ever greater emphasis on integrating high-quality cybersecurity and data privacy into their software. This trend also ties back to the trend of more complex contracts, as some companies may ask for guarantees around security concerns as a part of an outsourcing agreement.
How your company could be affected by the upcoming IT outsourcing trends?
With such a complex array of IT outsourcing trends affecting software development and the companies that do it, how should you expect things to change for your business?
The short answer is that it will partially depend on your industry. Looking at those seeing the biggest growth in IT services outsourcing, healthcare, HR, and finance lead the pack with 36%, 32%, and 30% growth. Growth rates for IT and software outsourcing as a whole are also high, with the industry expected to reach over $1 trillion dollars by 2030.
So even industries which haven’t seen major shifts towards software outsourcing can expect some change. Even small businesses which traditionally haven’t even considered outsourcing custom software development are increasingly doing so. One survey found that 21% of small businesses are now using this option.
In other words, ignoring the newest IT outsourcing trends is dangerous for nearly any business in 2025. The market trends pushing the industry are simply too strong to ignore. Understanding how your competitors are using software to their advantage and how that usage might change in the future is essential to remaining competitive.
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