The global IT services market: Why do companies outsource?

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A decade ago, debates raged in the IT industry about the effectiveness of outsourcing, but today it’s almost impossible to find someone who questions its importance. However, the reasons for collaborating with IT service providers have changed over the last ten years. Nowadays, it’s not just about reducing software development costs – outsourcing is a smart business decision in many different cases. So why do companies outsource?
Our own experience providing IT services to companies across the globe helped us determine eight common reasons to outsource. Let’s take a look!

1. Gain access to resources you cannot find locally

One of the common arguments for outsourcing in some regional labour markets is intense competition for information technology talent. Sweden is a case in point: it can be hard to find a Senior .NET developer there, even if a company offers its employees above-average salaries and benefits. In 2018, one in five European enterprises needed IT specialists, according to statistics.

Enterprises that had hard-to-fill vacancies for ICT specialists, 2017

In this case, outsourcing becomes a viable option, allowing a company to search outside the local labour market to find a specialist with the expertise it needs.

2. Find professionals with specific IT expertise

Some projects require professionals with skills, in-depth knowledge, and experience in a very narrow niche – for instance, in Big Data, Machine Learning, or Data Science. It’s tough to do a sophisticated project without strong, data-related expertise. That is why outsourcing IT needs to a service provider with the relevant knowledge and skills can be the only way to successfully implement the solution.

3. Delegate non-core competences

When a company uses outsourcing, it allows focusing on what they do best instead of trying to handle tasks they lack experience in. Let’s imagine an e-commerce business is striving to automate price monitoring on rivals’ websites. Building such a technical solution requires a skilled team of backend and frontend developers, database developers, data scientists, and analysts. Outsourcing this technical task to specialists allows the business to concentrate on how to use this information to stay ahead of their competitors.

4. Have a backup team for in-house resources

Established companies keep their developers busy working on multiple projects at a time, making it impossible to squeeze even a simple task into a tight schedule. However, unexpected bugs, delays, and additions to current projects may appear at any moment. In this case, having a remote team to handle urgent tasks allows the in-house employees to focus on long-term projects.

5. Split a project for security or to take advantage of time zones

If a project contains sensitive personal, financial, or proprietary data, it is crucial to minimize the risk of data leaks. It would be useful to take precautions by splitting the project between several teams. If each team is responsible for one part of the project, no single team member has complete knowledge about the project or complete access to its valuable data. This minimizes the risk of data leaks, corporate spying, or a team member replicating the project.

Legal restrictions can also be a reason for splitting a project and one of the arguments for outsourcing. If there are legal limitations on some activities in the country where a company operates, delegating these activities to a remote team in another location may be the best solution.

Finally, you may want to split a project to take advantage of time zone differences. For instance, if the company needs to work with its customers 24/7, utilising remote teams in different time zones is a common solution. Besides, spreading development activities over several non-overlapping time zones can significantly reduce the project’s time to market.

6. Scale your team up or down on demand

It is one of the most frequent reasons to outsource. At the start of a project, there should be a full team of designers and software developers. However, once the project is released, there is no need to retain multiple specialists. Outsourcing allows a company to scale a team up or down as needed for each stage of the project. The post-release activities can be managed by a small team on demand. 

7. Plan a project takeover

A project takeover is always challenging. It is crucial to consider the scope of the project, understand its complexity, and plan three steps ahead. Analysing every stage of a project may take anywhere from a few days to several weeks and, when you are on a tight timeline, it is easy to overlook critical information. When planning a project takeover, enlisting the help of an experienced IT provider greatly simplifies the task.

8. Reduce development costs

The difference in rates between countries can be immense. For instance, the costs of IT services in North America or Western Europe are much higher than in Eastern Europe. IT outsourcing makes it possible to reduce development costs while getting the same level of service. In addition, there is no need to spend money on building a software development infrastructure when a company uses outsourcing – everything is in place to start your project.

At the same time, hiring a remote team can incur additional costs associated with the time spent communicating with the team and building business processes. Thus, it is important to weigh all the pros and cons before deciding whether or not to outsource.


Companies outsource for a number of reasons. Having a reliable, remote IT partner allows a company to explore new opportunities and expand its core businesses. If any of the cases mentioned above are familiar to you, don’t hesitate to contact us.

Thank you for reading and if you have any comments or questions about this article, we would be happy to hear from you. 


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