Research from STX Next has found that almost nine in 10 CTOs (89%) plan to outsource software development or IT expertise in the future. This is despite the fact that 59% are not currently outsourcing, indicating that it is set for a resurgence.
The findings were taken from STX Next’s 2021 Global CTO Survey, which polled over 500 CTOs.
Outsourcing has experienced a lull in popularity, with 46% of CTOs having never outsourced technical talent before, while 43% have done it in the past but stopped. The reasons for ceasing outsourcing include:
- Low-quality work
- Lack of strong relationships with external partners
- Communication issues
- A poor cultural fit
However, outsourcing still has major appeal if prospective partners abroad up their game. Of those who have outsourced, 39% have done so globally, while 33% have outsourced within the same continent.
“Outsourcing might have become less of a focus for CTOs in recent years, but our figures show that tech leaders remain very much open to the idea and are exploring how it could work for their business in the future,” said Maciej Dziergwa, CEO of STX Next. “There are many different ways to outsource software development and IT capabilities, but nearshoring – where companies engage partners in other countries but within a similar region or time zone – has potential to deliver the benefits of outsourcing while avoiding the pitfalls of the past.
“For example, choosing a partner in a neighbouring country or on the same continent enables the outsourcing business to closely vet the credentials of prospective partners. Once work has started, the lack of significant time differences or cultural and language barriers helps form close, lasting relationships where outsourced teams gain a comprehensive understanding of their clients’ goals and requirements and their roles in helping achieve them.”
To make the most of this desire to outsource in future, Dziergwa believes it is now up to IT firms and software development houses to do more to build trust with would-be partners in the quality of their work.
“Overall, outsourcing still has great potential and companies want to do it, so the next step is for businesses and their IT partners to figure out how to make it work long-term,” added Dziergwa. “Tech partners need to redouble efforts to improve the quality of their service and go the extra mile to ensure they properly integrate themselves into the companies they work with. This means understanding not just what their clients want in terms of features and functionality, but also the wider business goals they want to achieve by building new software. In short, partners should ensure they build a client’s product as if it were their own.”
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