Before COVID-19, 2020 was seen as a year of hope and growth for every industry. But the pandemic has changed everything at an unprecedented speed. Every person and every industry has to adjust themselves to the disruption caused by it and the consequences are expected to last for years. That’s when we intervene with our 2020 IT Outsourcing Report to show you what 2020 looks like in terms of numbers and charts.
Below is CMC Global‘s compilation of IT outsourcing reports, to sum up a rough 2020. Our report compilation includes extensive statistics of the world’s ITO market to reveal how they performed in 2020, what challenges they are facing, as well as the opportunities caused by the pandemic. Download our IT outsourcing report and see if your plan for 2021 is the most suitable one!
2020 Global IT Outsourcing report
In terms of IT outsourcing, this market has been affected, like the majority of industries out there. Amid the pandemic crisis, the global market for IT Outsourcing was estimated at $342.9 billion and is projected to reach $410.2 billion by 2027. The market growth has decreased for sure, but the number is not as large as in other industries such as tourism or logistics.
The pre-COVID era was a time of stable growth and opportunities
In 2019, the market size of IT outsourcing amounted to $66.52 billion while the global traditional outsourcing industry generated $92.5 billion in total. In that same year, the total contract value of the business process outsourcing (BPO) market rose to $26 billion.
The prediction for future was once THIS nice.
The revenue for World’s IT consulting & implementation services market from 2016 to 202 is expected to amount to approximately $53.7 billion by 2021.
In all regions including EMEA, America, and Asia Pacific, ITO grew steadily in 2019 and was projected to thrive more in 2020.
However, everything has changed since the end of 2019, with the outburst of Coronavirus in Wuhan, China, and spread quickly to other countries on this planet.
The impact of COVID-19 on ITO market
The coronavirus pandemic is projected to have different impacts on IT spending by region in 2020. A shared feature? Most countries adjust to significantly decrease their IT spending, excluding Latin America
If 2020 was software, we’d like to return it since this version has got virus
Global spending on software including middleware, custom-built software by contractors and consultants, applications, and operating systems, has experienced steady growth until 2019. With the outburst of COVID, the number dipped significantly and is expected to slowly rise to its 2016 level in 3 years.
As many can see, the impact of the COVID-19 crisis on global IT spending in 2020 is different for each industry. There are industries that were severely impacted such as transportation or manufacturing. There were also markets that rose to their predicted number such as governments and utilities.
According to HFS research on IT and business services expenditures in 2020, it takes at least 2 years for all industries to have positive growth after the 2020 damages. With the trend of working from home, there is a significant amount of work unable to complete due to lockdowns and social distancing policies all around the world. Even though government bailouts can prevent some big businesses from failing, the case can not be applied to a majority of small businesses.
The same patterns can be found in different IT services’ growth. Below is a chart to describe emerging technology spending intentions impacted by COVID-19 according to technology executives worldwide as of 2020.
The same patterns can be found in different IT services’ growth. Below is a chart to describe emerging technology spending intentions impacted by COVID-19 according to technology executives worldwide as of 2020.
This is a survey carried out between March and June 2020 by HFS research. According to this, 44% of the high-profile technology executives said that they expect spending on 5G to increase in the next 12 months, while other 43% believe that process automation spending was on the roll and likely to increase in the next year.
As we can see, COVID comes with its huge and irreversible damage – and yet, it carries some one-of-a-kind opportunities for the IT industry, with the rocket growth of Zoom or the emerging demand for RPA.
Now, The situation is getting better in many countries such as Vietnam or New Zealand, but as the next waves of COVID have returned to Europe and America, we haven’t known how long can these lockdowns ease away so that businesses can return to a point where big deals can be done. In 2020, IT service providers have struggles fighting to survive, exit or dominate. And as 2021 is soon to come, and the strategy for a COVID future is clearer than ever, we may get a few surprise entrants into a market where there is no pre-written playbook. 2021 and beyond is the time for the brave, the smart and the lucky to take control – who knows?
2020 Vietnam IT outsourcing report
Result from a quick response to COVID
According to Statista’s The Best and Worst Rated National COVID-19 Responses, Vietnam is the best country to respond to COVID-19, both in terms of efficacy and the subsequent level of public approval.
According to AFP, Vietnam’s quick and strong response to the pandemic has helped this country buck a global recession in 2020. While many Western countries are suffering from high infection and mortality rates, Vietnam has recorded a much fewer number of nearly 1,500 infected cases and 35 deaths thanks to their strict policy of mass quarantines, expansive contact tracing and strict controls on movement. These actions allow factories to reopen sooner and employees to swiftly get back to work.
So after Q32020, even though half of the questioned Vietnamese businesses believed that their revenues will decrease by 16% or more, the growth of IT Outsourcing in Vietnam is unstoppable. In 2019, an IT outsourcing report shows that Vietnam is ranked #5th in Kearney Global Services Location Index
Vietnam’s IT industry has faced rapid changes to catch up with global development. This country’s perks are a large IT Talent pool and reasonable cost for outsourcing in comparison to many major outsourcing countries such as Ukraine or India.
And with the threat of cyber attacks in a post-COVID world, Vietnam is the most proper candidate to transform your businesses.
This country secure its position in the top nascent countries for digital maturity and high levels of cybersecurity protection (according to Kearney’s 2019 report)
IT outsourcing trends in a Post-COVID world
Cost reduction
Before COVID, many businesses believe that cost reduction equals decreased service quality. But with the severe impact on the economy, CMC Global believe that cost reduction is a priority at the moment when business are facing serious economic threats. This outsourcing trend will only gain traction, placing advantages in the hands of most Asia IT outsourcing service providers.
See how competitive the IT outsourcing markets is, in terms of country and their offerings: https://cglobal.cmcglobal.com.vn/2020/10/05/top-outsourcing-countries-for-web-development/
Cloud and robotic process automation (RPA) are dominating.
Because of the social distancing and work-from-home trend, it’s of no surprise that Cloud and RPA solutions becoming a core component of most new outsourcing strategies and transactions. In fact, in a post-COVID world, they are not only a transformative driver but effectively table stakes for all business transformations now.
Supplier management is underpowered
COVID-19 for sure has put a strain on businesses’ supply chains, which makes supplier management more critical than ever. However, this function is now underestimated in most organizations, demanding people to acknowledge more and start to invest in building their supplier management capabilities to adjust to the “new normal”.
Agility is critical
All the social impacts of the pandemic, from ever-changing business scenarios, heightened visa restrictions, or new and increasing customer expectations are boosting service providers all around the world to become more agile. For the short term, the priority of firms will still be cost, speed, quality, and flexibility rather than geography.
But to keep up with the game and stay competitive, service providers, especially those in Vietnam need to rethink how to provide effective remote services, starting with the agility in their working process, mindset as well as products.
See Technology trends in the aftermath of Covid-19: https://dolphin.cmcglobal.com.vn/en/technology-trends-in-the-aftermath-of-covid-19/
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