Market Size of IT Outsourcing Industry
Study Period | 2019 - 2029 |
Market Size (2024) | USD 617.69 Billion |
Market Size (2029) | USD 806.53 Billion |
CAGR (2024 - 2029) | 5.48 % |
Fastest Growing Market | Asia Pacific |
Largest Market | Asia Pacific |
Major Players*Disclaimer: Major Players sorted in no particular order |
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IT Outsourcing Market Analysis
The IT Outsourcing Market size is estimated at USD 617.69 billion in 2024, and is expected to reach USD 806.53 billion by 2029, growing at a CAGR of 5.48% during the forecast period (2024-2029).
- Information technology has become a competitive edge for most organizations. IT outsourcing has become more than a simple cost-reduction process with cloud migrations and cloud service options. Therefore, this new form is mainly driven by organizational motivations in terms of customer experience, business growth, and competitive disruption.
- More importantly, such a rise in preference among the newer and smaller organizations has led the key vendors of the market to increasingly concentrate on finding a way to integrate the offshore team with the on-site. Another critical aspect driven by small-scale players is the agility in vendor offerings, which refers to the time-to-market.
- There is a rise in demand by businesses to streamline business operations and focus on crucial activities that are revenue drivers, and outsource IT services for secure IT infrastructure enabling data protection. The businesses deploy market players' expertise in IT services to reduce organization-wide data-related risks. The BFSI sector is driving the market since recruiting specialists with advanced skills is time-consuming. To reduce the overall cost involved, the companies invest in outsourcing solutions.
- However, the lack of data security in cloud and server-based services is hindering the market's growth. Cloud-based services pose many specific security issues and challenges. Data is usually stored with a third-party provider and can be accessed over the internet in the cloud. This indicates that visibility and control over that data are limited. Nevertheless, growing demand for efficiency and scalable infrastructure and increasing cloud migration are driving the market.
IT Outsourcing Industry Segmentation
IT outsourcing involves a contractual arrangement where IT service providers take complete ownership and control over the client's IT infrastructure. The growing emphasis on operational efficiency and cost-effectiveness led to increased demand for outsourcing to offshore companies. The study tracks the regional and country-level market demand for IT outsourcing and provides detailed coverage of the major end-user trends affecting adoption.
The IT outsourcing market is segmented by organization size (small and medium enterprises and large enterprises), end-user vertical (BFSI, healthcare, media and telecommunication, retail and e-commerce, manufacturing, and other end-user verticals), by geography (North America (United States and Canada), Europe (United Kingdom, Germany, France, Italy, Spain, The Nordics, Benelux, Poland, and Rest of Europe), Asia-Pacific (China, India, Japan, Indonesia, Vietnam, Malaysia, South Korea, and Rest of Asia-Pacific), Latin America (Brazil, Mexico, Colombia, and Rest of Latin America), Middle East and Africa (GCC, South Africa, Turkey, and Rest of Middle East and Africa)).
The market sizes and forecasts are provided in USD for all the above segments.
By Organization Size | |
Small and Medium Enterprises | |
Large Enterprises |
By End-user Vertical | |
BFSI | |
Healthcare | |
Media and Telecommunications | |
Retail and E-commerce | |
Manufacturing | |
Other End-user verticals |
By Geography | ||||||||||||||||
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IT Outsourcing Market Size Summary
The IT outsourcing market is poised for substantial growth, driven by the increasing need for businesses to enhance customer experience, foster business growth, and maintain a competitive edge. As organizations shift towards cloud migrations and service options, IT outsourcing has evolved beyond mere cost reduction to become a strategic imperative. This transformation is particularly evident among newer and smaller enterprises, which are pushing key market vendors to integrate offshore teams with on-site operations and offer agile vendor solutions. The demand for streamlined business operations and secure IT infrastructure is propelling the market forward, with the BFSI sector playing a pivotal role due to its need for specialized skills and cost-effective solutions. However, challenges such as data security concerns in cloud-based services pose obstacles to market expansion, even as the demand for efficiency and scalable infrastructure continues to rise.
In the Asia-Pacific region, countries like China, India, and Japan are emerging as significant players in the IT outsourcing landscape. China is transitioning towards high-end industrial production, while India remains a dominant force due to its vast talent pool and cost advantages. Japan is expanding its outsourcing scope to include cloud computing and cybersecurity, driven by technological advancements. The region's growth is further supported by the maturation of data center markets and infrastructure upgrades. The market is characterized by fragmentation, with major players like IBM, DXC Technologies, Accenture, NTT Corporation, and Infosys employing strategic partnerships and acquisitions to enhance their offerings. Recent developments, such as DXC Technology's collaboration with ServiceNow and Infosys's acquisition of Danske Bank's IT operations, highlight the ongoing efforts to innovate and expand in the global market.
IT Outsourcing Market Size - Table of Contents
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1. MARKET DYNAMICS
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1.1 Market Overview
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1.2 Market Drivers
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1.2.1 Growing Demand for Efficiency and Scalable IT Infrastructure
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1.2.2 Organizations are Increasingly Focusing on IT as a means to Gain Differentiation by Relying on Outsourced Vendors
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1.2.3 Ongoing Migration Toward the Cloud and Adoption of Virtualized Infrastructure
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1.3 Market Challenges
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1.3.1 Fragmented Nature of the Market And Growing Incidence of Data Breaches
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1.3.2 Dynamic Needs of IT Structure Impacts the Cost of Customization for End Users
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1.4 Impact of COVID-19 on the IT Outsourcing Industry
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1.5 Industry Attractiveness - Porter's Five Forces Analysis
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1.5.1 Threat of New Entrants
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1.5.2 Bargaining Power of Buyers
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1.5.3 Bargaining Power of Suppliers
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1.5.4 Threat of Substitute Products
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1.5.5 Intensity of Competitive Rivalry
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2. MARKET SEGMENTATION
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2.1 By Organization Size
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2.1.1 Small and Medium Enterprises
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2.1.2 Large Enterprises
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2.2 By End-user Vertical
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2.2.1 BFSI
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2.2.2 Healthcare
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2.2.3 Media and Telecommunications
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2.2.4 Retail and E-commerce
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2.2.5 Manufacturing
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2.2.6 Other End-user verticals
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2.3 By Geography
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2.3.1 North America
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2.3.1.1 United States
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2.3.1.2 Canada
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2.3.2 Europe
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2.3.2.1 United Kingdom
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2.3.2.2 Germany
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2.3.2.3 France
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2.3.2.4 Italy
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2.3.2.5 Spain
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2.3.2.6 Poland
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2.3.2.7 Belgium
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2.3.2.8 Netherlands
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2.3.2.9 Luxembourg
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2.3.2.10 Sweden
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2.3.2.11 Denmark
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2.3.2.12 Norway
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2.3.2.13 Finland
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2.3.2.14 Iceland
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2.3.3 Asia
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2.3.3.1 China
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2.3.3.2 India
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2.3.3.3 Japan
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2.3.3.4 Indonesia
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2.3.3.5 Vietnam
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2.3.3.6 Malaysia
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2.3.3.7 South Korea
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2.3.4 Latin America
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2.3.4.1 Brazil
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2.3.4.2 Mexico
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2.3.4.3 Colombia
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2.3.5 Middle East and Africa
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2.3.5.1 GCC
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2.3.5.2 South Africa
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2.3.5.3 Turkey
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IT Outsourcing Market Size FAQs
How big is the IT Outsourcing Market?
The IT Outsourcing Market size is expected to reach USD 617.69 billion in 2024 and grow at a CAGR of 5.48% to reach USD 806.53 billion by 2029.
What is the current IT Outsourcing Market size?
In 2024, the IT Outsourcing Market size is expected to reach USD 617.69 billion.