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Software Development Outsourcing Trends in Europe

Software development outsourcing is common practice all over the world. The market has grown sensitively between the 2015-2019 period, and it doesn't seem to stop. What drives development and innovation in businesses across different industries, also drives developments in the IT and software development outsourcing sector.

Software Development

Businesses in all sectors are more aware today than ever before of the advantages offered by the fast and accurate implementation of digital technologies. IT development services have helped businesses throughout the years to improve their performances and offer clients advanced products and services.

In the past, outsourcing was preferred due to short-term goals, such as increased efficiency and cost reduction. Today, the paradigm has shifted. Instead of focusing on finding cheap labor in the sector, companies today try to hire software development teams comprised of members with specific, well-defined skills. Companies today search to hire teams able to meet their high digital expectations and wait for innovative solutions on their part. Europe is no exception here. Web development companies and their employers seem to be reshaped by the latest trends in the industry.

Trends that reshape software development outsourcing in Europe

The digital transformation of businesses all over the world is about to reach new levels by 2025. The change-drivers identified in the sector by digital transformation experts are described succinctly below.

  • New security vulnerabilities are due to impact how software development teams carry on their activity. Most of them will focus on creating new products and services, mainly based on Security-as-a-Service.
  • Businesses which used outsourcing services in the past will decide if outsourcing or in-house development teams are more appropriate in their case.
  • Software development outsourcing will become a core service that companies in different sectors seek, thanks to higher rated of could and digital service adoption.
  • The integration challenges posed by new digital technologies will increase the demand for IT outsourcing. Most businesses today lack in-house software development teams. This usually happens due to the high costs associated with having in-house digital development teams.

From one-time projects to long-term partnerships

Software Development

According to analysts and experts, the most important shift we will witness in the software development sector will be lengthier partnerships. Companies that today outsource projects to software development teams will seek more frequent interactions and long-term partnerships. Because in the future, the focus will fall on around-the-clock support and maintenance matters. Besides, outsourcing will shift from the fixed-price model to other methods of outsourcing a dedicated development team to clients in need of constant support and help.

Other digital trends that will lead to lengthier collaborations are described below.

  • Robotics, the Internet of Things and higher mobility rates influence how applications are perceived and how important they are for businesses in different sectors. Apps state-of-the-art software systems are mandatory for all the above and reinforcing long-term collaborations with software development teams is highly important.
  • Industry-specific applications and tools bring more value to the businesses adopting them. So, having skilled professionals to help with the development and update of these systems is growing in importance rapidly.
  • Regions in Europe, like Eastern Europe, facilitate long-term collaborations between outsourcing teams and businesses in different sectors. Cost-effectiveness and high-quality development services motivate businesses to increase the frequency of their development projects. High-level skills and a mental and cultural proximity Western Europe make these companies incredibly attractive for businesses all over the world.
  • Still, Western-European countries like Denmark, Germany, and Finland are leaders in off-shore software development outsourcing.

Outsourcing Vs. In-House

Offshore outsourcing remains still at relatively low levels in Europe. On-shore software development outsourcing is still preferred by companies in many sectors, as compared to in-house development.

Tech start-ups, companies in the automotive sector, telecom, banking, oil, and energy are the ones with the highest percentages of outsourced development services, as opposed to in-house software development teams.

Sweden is the country with the highest rates of on-shore software development, 87% of the total projects in software development here being outsourced to on-shore companies. Second, comes Norway, 80% of their outsourcing operations being attributed to on-shore teams. The European country with the lowest rates of on-shore outsourcing is Denmark, reaching a shy 59%.

Software Development

What do businesses search for in software development teams?

When searching specialized software development teams, what do European businesses search for?

Generally, businesses want skilled and knowledgeable teams, able to juggle multiple projects. They want teams to develop systems and apps such as enterprise development, Cloud, and SaaS web application development. But besides finding the necessary skills for the development of similar apps, they also try to find reliable, trustworthy collaborators.

  • Clear and transparent approaches to software development
  • High levels of security
  • Continuous communication and improvements
  • Dedicated teams
  • Talent
  • Long-term technological partnerships

Quality-centered approaches on software development have become the norm, for companies who aim to outsource to professional development teams

Because businesses today focus on security matters, they also try to find teams ready to meet their most work with ethics in mind.

According to specialists in the field, most businesses searching to outsource their software development projects look for the following.

  • They try to find out if the company rewards honest people and sanctions the ones with questionable ethics. They use tools and platforms like Glassdoor and Trustpilot in the process.
  • They try to get information on management's integrity and the company's reward programs.
  • The management takes full responsibility for project failures and tries to make amends with the client.
  • They pay attention to companies' profits. Skilled and reliable teams make a good profit. This is a sturdy indicator of a company's work ethics and market value.
  • Many businesses evaluate team dynamics and interactions, before hiring a software development team. They also ensure to outsource to teams where members have complementary sets of skills.
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