Top 4 Staff Augmentation & Outsourcing Trends in 2023

As technology continues to advance, so do the ways companies choose to staff their businesses. In 2023, it’s evident that outsourcing and augmenting your workforce is becoming an increasingly popular strategy of balancing workload efficiently, and filling in skill gaps as the war for talent intensifies.

Whether you're a founder building your first team or an executive responsible for driving major initiatives forward, having a good understanding of future trends shaping the space will give your organisation a competitive edge.

Here are 4 telltale signs that the outsourcing market is heading towards transformation!

#1: Cost saving is no longer the main motivator

Companies in the UK are transitioning their priorities away from reducing costs and embracing a new main focus on their core business and access to talent through outsourcing. Despite the rising recession threat, decision-makers worldwide are increasingly spending more on tech rather than cutting budgets.

As a result, global spending on IT services is expected to increase by 5.1% in 2023 reaching a whopping $4.6 trillion despite economic uncertainty. We will likely see businesses pushing forward on digital initiatives to maximise efficiency and keep up with emerging technology trends.

#2: Staff augmentation in response to the tech talent shortage

Companies across industries are struggling to stay ahead of the talent curve - especially when it comes to recruiting and retaining developers with the right skillset. The tech talent shortage has become a bottleneck for many businesses, presenting an overwhelming challenge to digital transformation efforts.

64% of companies agree that the tech talent shortage is the most significant barrier to adoption of emerging technologies. This also prevents organisations (70%) from driving change and innovation.

Staff augmentation gives you access to skilled talent where gaps exist without having to make expensive long-term hiring commitments. It’s also a highly flexible solution, allowing companies to scale up or down their resources as needed. This allows them to be more agile and cost-effective while still supporting their core business objectives.

#3: Software development is the most outsourced IT service

In a world driven by technology, companies are pivoting from buying traditional software to crafting their own tailored solutions. This shift has fuelled the rapid expansion of cloud computing as organisations explore new ways to bolster revenues, add new products and services, as well as increase value for existing offerings.

With software development as a critical component of many business operations, it comes as no surprise that this service remains the most popular to outsource. 60% of companies outsourced some software development in 2022, and this number is projected to be even higher in 2023.

Whether it’s a startup or a bigger enterprise, concerns such as compliance and scalability can often be addressed with greater expertise through partnering up with a software provider.

#4: Outsourcing to multiple software partners gains traction

Companies are increasingly embracing a diversified approach to outsourcing, leveraging multiple vendors to meet their technology needs (also called multisourcing). Multisourcing can help companies achieve a variety of project goals while remaining agile and responsive to today's fast-paced business climate.

In response to this trend, we would also likely see more and more software vendors working collaboratively with each other to offer innovative digital solutions that cover the full suite of IT services.

Sources: PA Consulting, Gartner, Accelerance, Nash Squared

Final Thoughts

As we move into 2023, staff augmentation and outsourcing trends will continue to emerge. Despite economic pressure, businesses are not cutting down on tech spending as digital transformation initiatives are more critical than ever to stay competitive.

Instead, sourcing skilled professionals to power digital initiatives has taken top priority in today's market. As a result, we will see an increasing number of companies turning to staff augmentation, outsourcing their software development, and working with multiple software vendors to address interrelated tech needs.

Are you considering augmenting your staff or outsourcing certain IT functions?

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