7 key software development outsourcing trends you need to know about for 2025 and beyond

Are you thinking about outsourcing software development to cut costs?

Of course you do – who doesn’t like lower costs?

But, to make the most of it, you should be aware of the latest trends in software development outsourcing.

Here, we’ve compiled a list of the 7 key software development outsourcing trends you should know about for 2025 so you can stay ahead of the curve and pick the right outsourcing partner.

Let’s dive in!

Software development outsourcing: market overview

Let’s start at the top – what’s the state of the software development outsourcing market?

In 2024, the worldwide IT outsourcing market (which includes software development) reached a volume of $541.4 billion.

And the total global spending on IT outsourcing isn’t far behind – in 2023, it reached $519 billion.

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Here’s another interesting statistic – 92% of the world’s largest 2000 companies use IT outsourcing services.

So, if we had to sum up the state of software development outsourcing in a few words, it would be: healthy and growing.

Next, we’ll discuss the key trends driving that growth.

Key software development outsourcing trends

Here, we’ll cover the top trends in software development outsourcing in detail.

Focus on value over cost

When you think about outsourcing, probably the first thing that comes to mind is cost reduction.

And that’s no surprise – in a Deloitte survey, 70% of business leaders named cost as the main reason they outsource.

source: Deloitte

But, this is starting to change. Businesses are now prioritizing value over just cost savings. 

Outsourcing development is starting to be more about investing in expertise and finding long-term, strategic partners rather than just cheap developers to write some lines of code.

And this means that with outsourcing you can improve business outcomes, too, instead of just cutting costs.

Here’s what you should look for in an outsourcing partner:

• Strategic alignment – Ensure they’re aligned with your strategic goals. A partner who shares your vision and long-term goals is more likely to provide extra value.
• Quality of expertise – Look beyond price and focus on the specialized skills and experience they bring to the table. This is particularly important for complex projects that use advanced technologies. 
• Innovation – Look for outsourcing partners who are up-to-date with the latest technologies and best practices because an innovative partner will help you stay ahead of the curve 

And of course, you should also focus on building a long-term relationship.

Having a reliable, long-term partner is the best way to get the most value out of outsourcing software development

And that’s exactly what you should want.

Rise of nearshore and onshore outsourcing

While demand for offshore outsourcing remains strong, nearshore and onshore outsourcing are becoming more and more popular.

But, what exactly is the difference between these outsourcing models? And why are nearshore and onshore outsourcing becoming more popular?

The key difference between these models is geographical distance – but, that’s just the start. Here’s a more detailed comparison:

Nearshore vs offshore vs onshore development: comparison

As you can see, while offshore development is cheaper, it’s also more risky and challenging.

When you outsource development offshore, you’ll face a bunch of challenges, like:

• Poor communication
• Low quality standards
• Significant time zone differences
• Cultural differences

And these challenges can completely derail development.

In fact, 60% of outsourced projects fail because of bad cultural compatibility:

But, when you outsource to a nearshore or onshore destination, you minimize (or even completely eliminate) these risks.

And that’s why it’s becoming so popular.

Low-code and no-code development

Low-code and no-code platforms are making it easier to create apps without needing extensive programming skills. 

Users can build apps with pre-built components and templates, connecting them through a visual interface.

And outsourcing companies are using low-code and no-code platforms to deliver projects faster and at a lower cost.

Here are their key features:

source: Maruti Techlabs

Some of the top low-code/no-code platforms on the market are:

• Appsmith
• Mendix
• Bubble
• Glide

The main appeal of these platforms is that they can significantly speed up development and help outsourcing companies deliver projects faster.

They help them rapidly prototype, develop, and deliver software – without sacrificing quality.

But, there’s a catch.

Low-code and no-code platforms can only create simple apps – if you need complex features, you’ll still need traditional development.

Still, it’s a good choice if you’re a startup building an MVP and you need to get it to market quickly.

Focus on cybersecurity

Cybersecurity is a major concern nowadays.

With data breaches and cyberattacks on the rise, businesses are prioritizing security measures when outsourcing development.

And there’s a very good reason for that.

The annual cost of cybercrime is expected to rise from $9.22 trillion in 2024 to $13.82 trillion by 2028 – that’s a 48% increase in just 4 years!

source: Statista

And when you zoom in, you get another staggering statistic – the average cost of a data breach in 2024 reached $4.88 million.

But, data breaches aren’t just a financial issue.

They also cause a massive reputational cost, with 60% of companies going out of business after suffering a data breach.

It should come as no surprise that businesses are prioritizing cybersecurity when choosing an outsourcing partner – so, how do you make the right choice?

The best place to start is checking if they have relevant security certifications, like ISO/IEC 27001:

source: Kolide

If they do, that means they follow internationally recognized security standards and best practices.

And that’s how you find a company that’s serious about cybersecurity.

AI-powered software development

AI-powered software development is the future – and outsourcing is no exception.

AI software development tools are helping outsourcing companies be more efficient and deliver projects faster.

Of course, the first tools that come to mind are AI coding assistants like:

• Amazon Q Developer
• Codeium
• Github Copilot
• Tabnine

These coding assistants give context-aware suggestions and can write boilerplate code, letting developers focus on more important tasks.

And they have a real impact on productivity and efficiency.

Developers who use Github Copilot overwhelmingly agreed that using it makes them more productive and efficient:

source: Github Blog

But, AI coding assistants are just the tip of the iceberg.

There are plenty of other AI development tools out there, like:

• AI static application security testing (SAST) tools – Amazon CodeGuru, Snyk
• AI documentation tools – Mintlify, Scribe
• AI design tools – Uizard, Figma AI

What all of these tools have in common is that they automate repetitive tasks and help outsourced development teams work more efficiently.

And that’s why more and more companies are using them.

Cloud-native development

Cloud-native development is another major trend in software development outsourcing.

It’s a modern approach to software development that uses cloud environments to design, build, and run applications. 

And it’s a huge market, too – the cloud-native development market will reach a staggering $2.34 trillion in value by 2030.

The key cloud-native technologies driving this trend are:

• Containers and Kubernetes – Containers are lightweight, self-contained units of software that include everything needed to run an application. Kubernetes, an open-source platform, automates the deployment, scaling, and management of containerized applications. 
• Microservices architecture – In contrast to monolithic architectures, microservices break down applications into smaller, independent services that can be deployed and scaled individually. This reduces downtime and helps you build more agile and flexible software.

• Serverless computing – Serverless architecture allows developers to build applications without worrying about managing the underlying infrastructure. This reduces operational overhead, lets teams focus on writing code and helps them build highly scalable apps while also lowering your infrastructure costs.

Now, cloud-native development isn’t the right fit for every software product.

Cloud-native apps can be challenging to build and manage, so if you’re building a simple app, going with a cloud-native approach is overkill.

But, for complex products that handle large data volumes, like enterprise software, it’s a great choice.

That’s because cloud-native apps are much easier to scale and you don’t depend on physical infrastructure.

And since cloud services operate on a pay-as-you-go model, you only pay for the resources you actually use. 

Growing demand for specialized talent

The IT skills gap is a huge problem for companies – and it’s only getting worse in 2024.

IDC estimates that by 2026, 90% of businesses will be impacted by talent shortages and will lose a total of $5.5 trillion because of it.

And this is especially true for specialized, cutting-edge roles like:

• AI engineers
• Data scientists
• Solution architects
• Cybersecurity engineers
• Cloud engineers

This is why companies are turning to outsourcing to access a wider talent pool and help fill the skills gap.

And it comes with another benefit, too – lower labor costs.

Here’s a comparison of the average hourly rates by role and region:

Average hourly development rates by role and region

So, if you’re a U.S.-based company and you hire a solution architect from a company from Eastern Europe, you’ll pay 2-3x lower hourly rates.

Since they’re outsourced, you’ll also eliminate other costs like training, recruitment, and employee benefits – the company that employs them bears these costs.

And that’s why outsourcing is your best bet if you need specialized talent.

Software development outsourcing trends: FAQs

Need a reliable outsourcing partner?

Do you want to outsource development but you’ve been stung before by unreliable, low-quality outsourcing partners?

Well, you’re in the right place.

We’re a high-caliber, full-service software development company and we pride ourselves on the quality of our work.

And if you partner with us, you’ll be in safe hands.

If you want to learn more, feel free to reach out and our team will get back to you to set up a quick call to discuss your needs in more detail.