Software Development Outsourcing Statistics: Key Insights for 2025

Whether you’re a startup racing to get your product to market or a large enterprise navigating digital transformation, outsourcing offers the agility and expertise needed to stay competitive.

In this article, we cover the key software development outsourcing statistics and insights behind the continued rise of development outsourcing and the need for specialized offshore expertise.

The Growth of Software Development Outsourcing

Outsourcing has quickly become a cornerstone of modern software development, but how significant is its impact? By examining the industry’s growth, we can see how much businesses are relying on this approach to meet their tech goals.

From market size to the percentage of companies outsourcing, the numbers tell a compelling story about how outsourcing is shaping the future of software development.

Here’s a closer look at the data fueling this trend.

Market size and growth rate

The software development outsourcing market has seen impressive growth over the last decade, driven by the demand for digital transformation and the surge in remote work.

In 2023 alone, the industry reached an estimated valuation of $480 billion, showcasing its steady rise. 

The IT outsourcing market is projected to grow from $617.69 billion in 2024 to over $800 billion by 2029, reflecting a compound annual growth rate (CAGR) of 5.48% and solidifying its role as a critical driver of global business innovation.

Historically, the sector has experienced consistent growth, with a CAGR of over 5% from 2020 to 2023. This upward trajectory highlights the increasing reliance on outsourcing for scalable, cost-effective software solutions. 

The market’s growth is further bolstered by emerging technologies like AI, cloud computing, and blockchain, which require specialized expertise often sourced through outsourcing.

Percentage of outsourced work

Deloitte’s 2024 Global Outsourcing Survey showed that over 76% of companies outsource IT functions, with specific areas like coding, quality assurance (QA), and UX/UI design being more common than others.

This trend is driven by businesses seeking to streamline operations and allocate in-house resources to core activities.

For example, startups often outsource complete product development to reduce overheads, while larger enterprises use outsourcing to complement their internal teams. 

As companies continue to embrace this model, the share of outsourced software development work is expected to grow, reinforcing its importance in today’s tech-driven economy.

Reasons for Outsourcing Software Development

This trend isn’t just about cost-cutting—it’s a strategic move to scale smarter, innovate faster, and gain a competitive advantage. 

Outsourcing software development addresses talent shortages, cost pressures, and innovation demands, fueling its current popularity and shaping its promising future.

Here are six key benefits driving more businesses to work with remote software developers.

Cost efficiency

Outsourcing significantly reduces development costs by tapping into talent pools in regions with lower labor costs. A survey revealed that 48% of HR leaders feel the main reason to outsource is to save money.

This cost efficiency extends beyond salaries—it includes savings on overhead expenses such as office space, equipment, and benefits that would typically be required for in-house teams.

Additionally, hiring developers from regions known for high-quality, cost-effective talent, such as Latin America, Asia, or Eastern Europe, enables businesses to maintain competitive budgets while accessing skilled professionals.

This allows companies to reallocate resources toward other strategic priorities like marketing, R&D, or expanding their product offerings, further amplifying the return on investment.

Access to specialized expertise

Outsourcing connects businesses with highly skilled professionals with specialized skills in niche areas, such as enterprise applications, machine learning services, or e-commerce projects. 

This access enables companies to develop cutting-edge solutions without the lengthy process of hiring and training in-house specialists.

Faster time to market

Outsourcing allows businesses to accelerate development timelines by leveraging the expertise of specialized professionals ready to contribute immediately.

Instead of spending weeks or months recruiting and onboarding in-house developers, outsourcing gives you access to experienced teams that can hit the ground running.

Additionally, outsourcing partners often employ agile methodologies and streamlined workflows, enabling faster iteration cycles and quicker problem resolution.

With access to talent across different time zones, companies can also take advantage of round-the-clock development to maintain momentum and meet tight deadlines.

By removing bottlenecks and focusing internal resources on strategic priorities, outsourcing helps businesses bring products to market faster, gaining a competitive edge in rapidly evolving industries.

Scalability and flexibility

Whether augmenting an existing team or outsourcing the entire project, businesses can adapt their development efforts up or down without long-term commitments or overhead costs.

As such, 42% of CTOs view outsourcing as an integral solution for scaling operations quickly. 

Focus on core competencies

Delegating technical tasks to external developers lets businesses concentrate on their core operations and optimize broader business processes, increasing operational efficiency and allowing in-house teams to focus on driving growth and innovation.

Key Software Development Outsourcing Statistics 

The following statistics surrounding software development outsourcing highlight its immense value for companies looking to scale operations, cut costs, and access specialized talent.

• Outsourcing IT functions remains a dominant strategy, with 76% of surveyed companies outsourcing these tasks compared to only 52% that outsource business operations.
• Software development outsourcing revenue is projected to grow with a CAGR of 7.54% until 2027.
• Specifically for QA and software testing, a growth of $30.46 billion is projected by 2028.
• 9 in 10 Fortune 500 companies have IT-focused multi-year contracts with managed service providers.
• In one Deloitte survey, 94% of the companies surveyed that were using AI and machine learning technology used outsourced service providers to develop their tech.
• The custom software development sector alone is projected to grow to $126 billion by 2026.
• The number of software developers in the US is projected to grow by at least 17% by 2033, an above-average rate due to high talent demand.
• 72% of contracts generated by outsourcing firms come from IT services.
• 15% of US companies outsource app development and maintenance, and 20% offshore all IT support.
• Asia-Pacific dominates the market for global IT outsourcing, with Latin America (LatAm) continuing to grow in popularity due to its thriving tech market, competitive rates, compliance, and service quality. Countries like Mexico, Brazil, and Costa Rica have emerged as prominent hubs for software development, offering cost-effective access to highly skilled talent that meets the demands of global businesses.
• Especially for US companies, outsourcing IT services offshore can save up to 70% in labor costs.

Key Domains of Software Development Outsourcing

The software development outsourcing market thrives by catering to diverse needs across industries. Here are the key services you can outsource to remote developers.

1. Web development

Outsourcing web development remains a cornerstone of the industry as businesses strive to establish a strong online presence. 

From creating dynamic websites to developing complex web applications, software outsourcing companies or specialized recruitment firms offer access to global talent adept in cutting-edge frameworks and technologies. 

This approach ensures scalability, user-friendly interfaces, and robust back-end solutions tailored to specific business needs.

2. Mobile application development

The growing reliance on mobile apps for everything from commerce to entertainment has made mobile app development a top outsourcing priority. 

Offshore teams bring expertise in iOS, Android, and cross-platform development, helping companies launch innovative apps quickly and cost-effectively. 

Businesses also benefit from access to developers skilled in emerging technologies like AR/VR and AI integration for mobile platforms.

3. Enterprise software development

Enterprise-level projects, such as ERP systems and CRM platforms, demand high precision and customization.

Outsourcing providers offer extensive experience in designing scalable, secure solutions that align with organizational goals. 

This ensures businesses can implement robust enterprise systems without the overhead of maintaining large in-house development teams.

4. Game development

Game development outsourcing is booming, particularly for mobile, console, and PC platforms.

Studios rely on external teams for everything from concept art and 3D modeling to game engine programming and quality assurance. 

Outsourcing enables companies to manage tight production schedules while accessing talent proficient in tools like Unity, Unreal Engine, and cutting-edge graphic design software.

Impact of Technology on Software Development Outsourcing

Technology has transformed software development outsourcing by enhancing collaboration and productivity. 

Cloud computing platforms like AWS and Google Cloud allow remote teams to work in shared environments, while tools like Slack and Jira streamline communication and project management between clients and outsourcing partners.

Automation and AI tools have further revolutionized outsourced development by expediting tasks such as code generation, bug detection, and testing. 

This reduces human error and shortens project timelines, while analytics-driven insights support smarter decision-making and optimized outsourcing outcomes.

Additionally, automation is driving the demand for developers specializing in RPA.

How Remote Software Development Work Is Changing

The global embrace of flexible work arrangements and the adoption of innovative engagement models have redefined how companies approach outsourcing software development services, enabling greater efficiency and access to talent.

Shift in workforce dynamics

The shift toward hybrid and fully remote structures has expanded the reach of companies seeking skilled offshore or nearshore developers. Distributed teams, often composed of professionals from various regions, are now a standard in the industry. 

These models not only broaden the available talent pool but also reduce overhead costs associated with traditional in-office setups. 

Furthermore, the acceptance and normalization of asynchronous work ensures continuous project progress across time zones, allowing more businesses to take a follow-the-sun model, which increases responsiveness and reduces delays.

New engagement models

Companies increasingly rely on arrangements such as time-and-material contracts, dedicated development teams, and project-based outsourcing to meet specific needs. 

These models provide flexibility, enabling businesses to adapt team sizes or project scopes in response to changing demands. 

Additionally, advances in collaboration tools, agile frameworks, and DevOps practices ensure seamless communication and workflow, further enhancing the effectiveness of these models.

Final Thoughts

The numbers don’t lie—this software development outsourcing is reshaping the tech industry, driving growth, and creating new opportunities for companies worldwide. 

From tapping into global talent pools to leveraging cost efficiencies, outsourcing has proven to be a strategic solution for companies seeking agility and expertise in their software projects. 

As tech advancements and evolving work models continue to redefine the industry, it’s important to stay informed to harness outsourcing’s full potential.

Dive deeper into software outsourcing with our comprehensive guide on how to outsource software development and discover practical insights to make software outsourcing work for your businesses.