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Why is software outsourcing one of the industries affected by coronavirus most and least?

realtsh profile image The Software House ・4 min read

When COVID hit, it was as if the world stopped turning for many people. When it comes to businesses, however, they had to run faster than ever before to brace for the impact. For some, it was a disaster. Some others got a boost. But pretty much every single industry will emerge from this somewhat different. Was COVID kind for the software outsourcing industry? Yes and no. Let’s take a closer look at that.

Software development industry may be one of the most and least affected industries in the coronavirus pandemic. How come? Let’s start with what changed the least:

There are still tons of projects

Thought that the economic problems caused by the coronavirus pandemic may have curbed the demand for software development outsourcing services? You couldn’t have been more wrong! While companies indeed face a lot of problems, they often see digitization as a way to protect or reinvent their business model and keep on going in these new circumstances.

The pandemic has sped up the effort of moving many traditional businesses to the online world. This includes activities as traditional as local food auctions or graduation ceremonies. We can also observe the rise of telemedicine and ecommerce on a scale unlike anything we have seen before. The Amazon CEO Jeff Bezos, now the world’s richest person, saw his fortune rise to the never-before-seen value of $190 billion.

Remote work is nothing new for IT folks

Today, most businesses moved online. Remote work has become a new normal rather than a privilege like it has been the case for many years. However, if there is a professional group that has had that privilege before, it has to be software developers. Well-used to working remotely and having already established efficient models for remote cooperation, many developers didn’t feel that much of a difference in their day-to-day routine.

Collaborative software is their daily bread

Many collaborative software tools have seen huge increases in popularity during the course of 2020. Zoom, the video conferencing software company, is now worth more than the likes of IMB and AMD and saw double-digit gains to its market value.

But it wasn’t the software development industry that has caused this phenomena. They have been using collaborative software to its full potential long before the pandemic. Of course, they continue to do so in 2020.

As you can see, the everyday routine and the sheer amount of work has not changed much for the software development outsourcing industry. But some things did change:

New way of building relationships with clients

Long buildup to establishing a relationship? Onsite workshops as a way to test it out? Flying to each other’s headquarters to boost trust and efficiency? Meetups and conferences as a way to meet and nurture business relationships? These activities have been put on hold. We are back to using the internet as a primary way of establishing new relationships. This results, among others, in the increased number of webinars. But also has some further implications.

Nearshoring and the rise of long-term cooperation

One of them is nearshoring. With the aforementioned communication difficulties, companies resort to working with the outsourcing vendors they already know or they try nearshoring – well-established vendors from neighboring countries. Many outsourcing vendors have noticed an increase in the numbers of past clients returning with new projects – a clear indication that in the face of the pandemic and troubles with establishing new relationships, companies go for what they know best and want big return and immediate return on their investment, even if the price is going to be somewhat bigger.

As for the “immediate”...

“I need it for yesterday” – the era of deadlines and crunches

Everyone and their mother knows about the constant delays in the premier of the long-awaited Cyberpunk 2077 game. The development was full of unmet deadlines and crunches. This has always been a big part of the video gaming industry. But today pretty much all developers face harsh deadlines and crunches due to the pressure to change the business model and get to the market faster that many organizations struggle with.

This means that a software development company which offers quality services and has processes that allow them to adjust to such difficult conditions are likely to outshine other vendors that focus primarily on being the cheapest. One way or the other, the reality of working on software has truly changed.

As you can see, the software outsourcing industry is clearly not one of those that have lost the most in the ongoing pandemic that had such a profound impact on the lives of so many. But there are a lot of changes and some of them are likely to remain well beyond the coronavirus struggle. It’s essential so that companies interested in outsourcing services took these changes into consideration when making their own strategic software decisions.

Outsourcing has definitely not lost its charm, but its evolution accelerated!

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