Impact of Covid19 on software outsourcing industry
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Impact of Covid19 on software outsourcing industry

Posted By Praveen Joshi

February 25th, 2022

Impact of Covid19 on software outsourcing industry

The COVID-19 outbreak has been the worst health emergency to have hit us in recent history. It has brought large parts of the world to a standstill and caused an economic downturn that nobody could have imagined. The effects of the pandemic are being felt worldwide and almost every industry has witnessed unprecedented change over the past few months. To minimise the damage caused by COVID-19, many businesses are now turning to outsourcing to meet their business needs and consequently, IT outsourcing companies has become more sought after than it ever was.

Experts point to three different ways that the pandemic has affected the global economy; the effect on demand and supply, disruption to the market and supply chain, and the inability of financial markets and companies to operate. Additionally, many companies have had to allow their employees to work from remote locations. As a result, the use of communication and collaboration tools has become widespread. Many companies are still in the testing phase, evaluating different systems and work strategies before they go ahead and implement them into a more permanent way of working.

Challenges faced by businesses due to COVID-19

The biggest challenge that most businesses have faced is the inability to deal with a loss of productivity. This is at both individual and team levels. Employers have had to adjust their plans and targets that were created before the pandemic, as they are no longer achievable. They now need targets that can be reached within the current operating restrictions.

Whilst many employees are successfully working remotely, it is not always the solution. Many can’t perform their jobs at home and remote working doesn’t work for many for several other reasons; for example distractions and a lack of quiet space at home, lack of internet connectivity, poor work stations, employees feeling isolated. In these circumstances, employers are making losses due to significantly reduced productivity.

By outsourcing in areas where there are already well established, productive teams in place, such as software development, companies can meet their business needs with a team whose productivity remains high. For new projects, hiring a software development agency in the UK, avoids the need to hire, set up and train new employees remotely and the need to purchase further remote working tools.

Software outsourcing and COVID-19

More and more businesses have in fact started turning to software outsourcing companies to seek assistance for their software development projects. A study conducted by Computer Economics has revealed that large organisations have witnessed a significant increase in their IT spending – the figure this year stands at 8.7%, more than 2% higher than the previous year. Similarly, the IT spending of medium-sized businesses has also increased by 1.8% this year. (Stats from

A likely cause of this increase has been the need to purchase IT equipment for employees to work remotely. Software outsourcing is a cost-effective alternative that can help companies to meet their delivery timelines without compromising on the quality of the product.

The Global Managed Services Report of 2020 emphasised the same thing. After surveying more than 1200 executives from 29 countries, they found that around 45% of businesses said they will look for external assistance in the next 18 months or so. They also found that only 12% of businesses surveyed were prepared to deal with the effects of the pandemic. Another 57% are of the opinion that managing internal teams during the pandemic is nothing less than a challenge. (Stats from

Current businesses have never seen such an economic downturn; For many, spending has shrunk significantly and they are left with limited budgets. Flexible business models that are resilient enough to deal with the effects of the pandemic are now needed. Outsourcing software projects is one action that businesses can take to deal with a lot of issues they are currently facing. Many businesses have already made that move and many others are planning to do the same.

Praveen Joshi

Praveen is a seasoned IT Solutions Leader and Director at RSK Business Solutions, a technology-driven IT Consulting Company that specializes in Bespoke Software Development, Agile Consulting, Mobile App Development, Smart Sourcing, and much more. For the last 17 years, he has been delivering quality custom IT solutions that help businesses achieve their goals.

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