IT outsourcing statistics for 2022

Stats and facts on everything you ever needed to know about the IT outsourcing sector and future trends.

BlogUPDATED ON March 28, 2022

What is the software development process

IT Outsourcing – Overview and General Information

How big is the global IT Outsourcing market?

According to GrandViewResearch, the global IT services market (inhouse and provided by third parties) was worth around $715.93 billion in 2020. The size of the global IT Outsourcing (ITO) market was valued at $556.67 billion in 2020 accounting for 77.75% of the overall market.

The IT services market has an estimated CARG of 8.4% and the ITO market 7.7%. On that basis, the IT services sector is expected to be worth around $1,070.28 billion by 2025 and the ITO market would be valued at around $ 806.63 billion. That would still be more than 75% (75.37%) of the whole IT services market.

Infographic showing IT services market value from 2020 to 2025


Depending on the type of methodology used to analyse and collect data, the value of the IT outsourcing market varies widely. GlobalNewswire and Statista also provide regularly cited data on the IT outsourcing market with Statista citing figures of around $400 billion, while GlobeNewswise speaks of just under $320 billion in 2020. Reliable data for 2021 had yet to be published at the time of writing.

Sources: Grand View Research IT market / IT Outsourcing market, Statista, Globe Newswise

Is there a tech talent shortage?

According to a McKinsey study – 87% of respondents said they either are experiencing gaps in their IT teams now due to recruitment bottlenecks or expect them within a few years.

Infographic showing number of companies that expect to experience IT skils gaps in coming years

Source: McKinsey

Many other sources support this statement, and the extent of the global IT talent shortage has increased significantly. 54% of companies currently report IT talent shortages.

Infographic showing global IT talent shortage trend by year

Source: Manpower Group

What are the most in demand tech skills?

Beyond 2021, tech skills such as quantum computing, networked technologies, as well as fintech and AI are expected to be the fastest growing areas of demand for tech skills.

Infographic showing 10 technology skills to see the greatest growth in demand between 2021 and 2025

Source: Forbes

What are the most in demand IT technologies?

The most sought-after programming languages in 2021 were:

Infographic showing most searched for and demanded programming languages and software development technologies

Source: Berkeley, HackerRank

Why IT outsourcing is so important?

Technology leaders China and the US could soon face an incredible IT skills shortage, according to management consulting firm Korn Ferry. This would give India the opportunity to take the lead as the world’s most technologically capable nation, with an expected 1 million IT professionals by 2030. If the US and China do not find an internal solution to their IT talent shortages, which currently seems unlikely, IT outsourcing will become even more strategically crucial to their continued development.

Sources: Korn Ferry, Classic Informatics,

Where are the most programmers?

The chart below shows the European countries with the most programmers. As expected, the countries with the largest economies and populations, Germany and the UK, have many developers. Countries from Central/Eastern Europe with many developers and which are often described as interesting IT outsourcing locations are for example Poland and Ukraine.

Infographic showing number of software developers by country

The data shown here is from 2018 and 2019, as this data has not been covered since then. As the number of developers in every European country (except Luxembourg) has increased in recent years, the current figures for 2022 are expected to be higher. The distribution of programmers across countries will remain largely the same.

Infographic map showing software developer distribution per capita density by country

Source: The State of European Tech

IT Outsourcing market overview

  • The percentage of companies’ IT budget going to outside service providers has risen significantly, to the highest rate in more than 10 years (US & CA).
  • On average, outsourcing accounted for 13.6% of the total IT budget in 2020/2021, a healthy increase from the 12.7% figure from 2019 (US & CA).
  • The median percentage of the budget allocated to IT Outsourcing decreased slightly, from 6.7% to 6.5% – the median spend going down and mean average going up means that companies already spending more of their budget on IT outsourcing are increasing their spend more than those originally spending less (US & CA).
  • Overall, the market will continue to grow, with 31% of UK clients planning to outsource more and 15% planning to outsource less. ‘Don’t know’ was up to 19% from 13% last year (UK).
  • Software application (app) development is the most frequently outsourced IT services function, with around 60% of companies outsourcing this function in part or in full (US & CA).
  • IT Security had the largest growth rate and is the second most outsourced function with 55% (US & CA).
  • In fact, 83% of IT leaders with in-house security teams are now considering outsourcing their security efforts to an specialist provider (US).
  • The next most common IT outsourcing functions are Network operations at 27% (US & CA).
  • Disaster recovery, application management, and database administration have a high cost-success and service-success rating (US & CA).
  • Functions with the greatest potential for improving service through IT outsourcing are IT security and disaster recovery (US & CA).

Source: Computer Economics (US & CA), PA Consulting (UK), Security Magazine (US)

IT-Service exports by country

The largest export countries of information & communications technologies (ICT) are large or well-developed economies like India, USA, China, UK, Ireland and Germany. However, the graphic below shows how important IT exports are for Eastern European countries, for whom IT services account for a disproportionate share of overall service exports.

Examples of high-income countries from Europe that generate a particularly high proportion of their service exports with IT services are Finland and Ireland and Ukraine and Belarus examples of low/middle-income countries. IT services account for more than 30 % of export services provided in these countries.

Other countries outside Europe that export a particularly high percentage of IT services are for example India, Israel, Pakistan and Armenia.

Infographic map showing IT services exports by European country

Source: World Bank Group, Nation Master

How many companies use IT Outsourcing services?

The figures presented here are for G2000 companies, over 90% of which have held ongoing ITO contracts in the last 5 years.

Infographic showing share of companies that use IT outsourcing

Other market research analyses come up with similar figures and KGMB offers more details on the extent to which IT outsourcing is taking place.

Infographic showing share of companies that use IT outsourcing to support internal teams

Sources: Statista, KPMG

Will the IT outsourcing sector continue to grow?

Among organisations that outsource app development, 34% are increasing the percentage of work outsourced over the previous year, while 9% are decreasing it, for an overall growth trend of 25 points.

Only 43% of organisations plan on changing the extent of  their IT outsourcing activities, indicating relatively low volatility in the outsourcing of app development functions.

Infographic showing app development outsourcing trend

Source: Computer Economics (US & CA)

Is IT outsourcing expensive?

For organisations that outsource app development functions, 40% of outsourcing clients experience higher costs and 31% lower costs compared to executing in-house. About 29% said they experience no notable monetary difference between outsourcing app development and in-house development.

Infographic showing costs of outsourcing app development

Source: Computer Economics (US & CA)

Which sectors rely most on IT outsourcing?

The sector a company is in has an influence on the tendency to outsource IT functions. The following figure shows the sectors that outsource app development with average frequency. Across sectors, an average of almost 60% of organisations outsource app development. In the financial services sector, that rises to 72%, followed by retail/wholesale companies at 60%. Further down the list are companies in the healthcare sector at a relatively modest 31%.

Infographic showing which sectors most outsource app development

Source: Computer Economics

Which is better IT outsourcing or insourcing?

  • The Top reasons for IT Outsourcing are cost reduction (71%), business transformation (50%) and improving service quality (50%) (UK).#
  • The Top reasons for shifting IT functions in-house are faster time to market and improved quality (88%), the need to build and control their intellectual property (63%) and the challenge of working with providers in Agile/DevOps teams (58%) as key drivers (UK).

Source: PA Consulting (UK)

Why is IT outsourcing good for organisations?

Globally, cost reduction is the primary reason for Outsourcing. Only a minority of organisations that use outsourcing say that cost is not important to their strategy.

Infographic showing why companies outsource

Source: Deloitte

IT outsourcing for small businesses

  • According to the data collected, the biggest challenge for small businesses is hiring new employees (50%).
  • Also, employee health care costs are among the biggest challenges faced by small businesses in the USA at 44%.

For small companies, IT outsourcing can be a useful means of countering the above-mentioned challenges, which are particularly difficult for small companies, because they are largely taken care of by the IT outsourcing service provider.

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