IT Outsourcing - Israel

Israel

The IT Outsourcing market in Israel is anticipated to witness a significant growth in the coming years.
According to projections, the market's revenue is expected to reach US$2.88bn by 2024.
Furthermore, it is estimated that the market will display a Compound Annual Growth Rate (CAGR) of 8.94% between 2024 and 2029, resulting in a market volume of US$4.42bn by the end of 2029.
Looking at the average Spend per Employee in the IT Outsourcing market, it is projected to reach US$637.40 in 2024.
In terms of global comparison, United States is expected to generate the highest revenue, with an estimated amount of US$197.30bn in 2024.
Israel is emerging as a leading destination for IT outsourcing due to its highly skilled workforce and advanced technology infrastructure.

Key regions: Brazil, Italy, United States, China, Germany

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.

For more information on the data displayed, use the info button right next to the boxes.

Market

Region

Region comparison

Currency

Analyst Opinion

Israel, a country located in the Middle East, has been experiencing growth in its IT outsourcing market in recent years.

Customer preferences: Israeli businesses are increasingly turning to IT outsourcing to reduce costs and improve efficiency. Many companies are looking for specialized IT services that they cannot find in-house. Additionally, Israeli businesses are looking for IT outsourcing providers that can offer flexible solutions that can be tailored to their specific needs.

Trends in the market: One trend in the Israeli IT outsourcing market is the rise of cloud computing. Many Israeli businesses are looking to move their IT infrastructure to the cloud to reduce costs and improve scalability. This has led to an increase in demand for cloud-based IT outsourcing services.Another trend in the Israeli IT outsourcing market is the increasing popularity of nearshoring. Israeli businesses are looking to outsource their IT services to nearby countries, such as Romania and Ukraine, rather than outsourcing to more distant locations like India or China. This allows Israeli businesses to take advantage of lower costs while still maintaining close proximity to their IT outsourcing provider.

Local special circumstances: One factor that has contributed to the growth of the IT outsourcing market in Israel is the country's strong technology sector. Israel has a thriving startup scene and is home to many innovative technology companies. This has led to a pool of highly skilled IT professionals who are well-equipped to provide IT outsourcing services.Another factor that has contributed to the growth of the IT outsourcing market in Israel is the country's close relationship with the United States. Many Israeli businesses have strong ties to the US market, and this has led to an increase in demand for IT outsourcing services that can support US-based operations.

Underlying macroeconomic factors: Israel's strong economy has also contributed to the growth of the IT outsourcing market. The country has a highly educated workforce and a favorable business environment, which has attracted many international businesses to set up operations in Israel. This has led to an increase in demand for IT outsourcing services that can support these businesses.Overall, the IT outsourcing market in Israel is growing due to a combination of factors, including customer preferences for specialized and flexible services, the rise of cloud computing, the popularity of nearshoring, the country's strong technology sector, its close relationship with the US market, and its strong economy.

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.