IT Outsourcing - Eastern Europe

Eastern Europe

Revenue in the IT Outsourcing market is projected to reach US$4.93bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 7.78%, resulting in a market volume of US$7.17bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$41.65 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

Eastern Europe has become a popular destination for IT outsourcing due to its skilled workforce, lower labor costs, and favorable business environment. The region's IT outsourcing market has been growing steadily, and this trend is expected to continue in the coming years.

Customer preferences: One of the main reasons for the growth of the IT outsourcing market in Eastern Europe is the increasing demand for high-quality software development services at a lower cost. Many companies in Western Europe and North America are turning to Eastern Europe for outsourcing their IT projects due to the region's skilled workforce, which offers a high level of expertise and technical knowledge. Additionally, the region's proximity to Western Europe and North America makes it an attractive destination for companies looking to outsource their IT projects to a nearby location.

Trends in the market: The IT outsourcing market in Eastern Europe is witnessing several trends. One of the significant trends is the increasing adoption of cloud-based services and solutions. Many companies in the region are shifting towards cloud-based solutions to reduce their IT costs and improve their operational efficiency. Another trend is the growing focus on digital transformation, which is driving the demand for IT outsourcing services in the region. Companies are looking for IT partners who can help them to develop and implement digital solutions that can improve their business processes and enhance their customer experience.

Local special circumstances: Eastern Europe is home to many highly skilled IT professionals who offer a high level of expertise and technical knowledge. The region has a strong educational system that produces a large number of IT graduates every year. Additionally, the region has a favorable business environment that supports the growth of the IT outsourcing industry. Many countries in Eastern Europe have introduced tax incentives, reduced bureaucracy, and simplified the process of setting up a business to attract foreign companies to invest in the region.

Underlying macroeconomic factors: The growth of the IT outsourcing market in Eastern Europe is driven by several underlying macroeconomic factors. One of the key factors is the region's lower labor costs, which make it an attractive destination for companies looking to reduce their IT costs. Additionally, the region's favorable business environment and its proximity to Western Europe and North America make it an ideal location for outsourcing IT projects. The region's stable political environment and its skilled workforce also contribute to the growth of the IT outsourcing market in Eastern Europe.

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.