IT Outsourcing - Central Asia

Central Asia

Revenue in the IT Outsourcing market is projected to reach US$1.05bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 12.95%, resulting in a market volume of US$1.93bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$32.56 in 2024.
In global comparison, most revenue will be generated in the United States (US$197.30bn in 2024).

Key regions: Netherlands, United States, Japan, Germany, Italy

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Market

Region

Region comparison

Currency

Analyst Opinion

Central Asia, the landlocked region that includes Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, has been gradually emerging as a destination for IT outsourcing.

Customer preferences: The region's IT outsourcing market has been primarily driven by the demand for low-cost software development services. Central Asia offers a lower cost of living and lower wages compared to Western countries, making it an attractive destination for outsourcing. Additionally, the region's proximity to Europe and Asia has made it a preferred location for companies looking to expand their business operations in these regions.

Trends in the market: Kazakhstan, the largest economy in Central Asia, has been leading the region's IT outsourcing market. The country has a well-developed IT infrastructure and a highly skilled workforce, which has attracted several multinational companies to set up their outsourcing operations in the country. Kazakhstan's government has also been supportive of the IT industry, providing tax incentives and subsidies to attract foreign investments.Kyrgyzstan and Tajikistan are also emerging as destinations for IT outsourcing. These countries have a young and educated workforce, and the governments have been taking steps to promote the IT industry. In recent years, several companies from Europe and North America have set up their outsourcing operations in these countries.

Local special circumstances: One of the challenges faced by the IT outsourcing industry in Central Asia is the lack of English language proficiency among the workforce. While the younger generation is more proficient in English, there is still a significant portion of the population that does not speak the language fluently. This has led to some companies outsourcing their customer support and other non-technical operations to other countries.

Underlying macroeconomic factors: Central Asia's IT outsourcing market is expected to continue to grow in the coming years, driven by the region's low cost of living and highly skilled workforce. However, the region's dependence on natural resources, particularly oil and gas, makes it vulnerable to fluctuations in global commodity prices. Additionally, the ongoing political instability in some countries in the region, such as Uzbekistan, could affect the growth of the IT industry. Despite these challenges, Central Asia's IT outsourcing market is expected to continue to grow, driven by the region's young and educated workforce and the government's support for the IT industry.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.