IT services outsourcing is commonplace in the modern business world. It actually plays a major role in enabling enterprise and overall global modernization. Thanks to outsourcing, small and large businesses can expand their IT teams, develop and deploy new digital solutions, and digitize their process at costs and speeds that would otherwise be impossible.
The global IT outsourcing market is a 526-billion-dollar industry expected to grow at a 4.13% CAGR over the next five years. This growth is mainly due to the increasing popularity and attractive benefits of outsourcing IT services, which, according to a Deloitte survey, is the most outsourced business operation worldwide.
While such stats and figures paint an intriguing picture, what’s perhaps more interesting is the fact that many large and successful global brands are big fans of IT outsourcing. Some of the world’s most dominant brands owe part of their success and influence to IT outsourcing. These companies embody the true potential of contracting IT services and labor. And we’ll be reviewing seven such companies to see what we can learn about the purposes and advantages of IT outsourcing as opposed to traditional hiring.
Top companies that outsource their IT and software development services
Here are seven companies that have soared to global ranks while reaping the benefits of IT outsourcing:
Google is one of the world’s largest and most recognizable tech companies. This internet behemoth runs a host of popular online services, including Google Search, Gmail, AdWords, YouTube, Google Maps, and Google Drive. It also sells various consumer gadgets such as the Google Pixel smartphone and Google Nest (formally Google Home).
Such a vast enterprise requires a massive and diversely-skilled workforce. By 2021, about 156,500 people were working at Google. This number has grown consistently over the last few years, and so has Google’s IT labor outsourcing strategy. According to a Bloomberg report, Google’s contract workers outnumbered its direct workers for the first time in 2018.
Google outsources IT talent and services mainly to cut labor costs, anchor its global position, and enrich its creativity pool.
Microsoft is another reputable tech giant with a diverse offering comprising numerous computing services, software tools, and hardware products. Like Google, Microsoft employs workers by the thousands to keep its operations running. Presently, that number stands at just over 180,000.
The Redmond giant is a firm believer in hybrid work and openly advocates for hybrid collaborations as the inevitable future of work. Back in 2015, Microsoft took an especially keen interest in augmenting its in-house workforce with external labor. It created “outsourced arrangements,” which translated to delegating company projects to third-party contractors or suppliers. Today, the company continues to cultivate this outsourcing culture.
Outsourcing enables Microsoft to supplement its labor expertise and muscle and get services beyond the traditional scope of its in-house teams.
Slack is a virtual workplace tool launched in 2009 under Slack Technologies. The platform was recently acquired by cloud computing giant Salesforce in a $27.7 billion deal. Today, Slack is a popular instant messaging, conferencing, and remote collaboration app with over 10 million daily active users. Interestingly, Slack owes much of its success to a well-calculated development outsourcing move.
In a 2015 article, Andrew Wilkinson, the founder and then CEO of MetaLab, narrated how Stewart Butterfield (CEO of Slack Technologies) outsourced his development company to polish and brand Slack’s bare-bone prototype back in 2013. MetaLab completely redesigned and optimized the platform in just six weeks, transforming Slack’s ideas and concepts into the winning world-class software product it is today.
GitHub is the world’s largest open-source code repository. It’s also a powerful coding platform where developers can collaborate on programming projects. It has over 200 million code repositories, and its global user base exceeds 80 million developers. Before it was acquired by Microsoft for $7.5 billion in stock, GitHub started on a shoestring budget, where outsourcing was the only way its founders could afford development labor.
As a cash-strapped startup in 2008, Tom Preston-Werner (GitHub co-founder) hired Git evangelist and Ruby on Rails developer Scott Chacon on an outsourced basis. (Fun fact: Chacon would go on to serve as CEO of GitHub.) In principle, GitHub is built to enable remote and collaborative software development. And true to this design, GitHub employs nearly 2,000 remote employees distributed across 15 countries.
Alibaba.com, sometimes called China’s eBay, is one of the world’s largest online marketplaces for all sorts of goods. When the company went public in 2014, it raised a record $21.8 billion in the initial stock sale, making this the biggest IPO in US history.
Alibaba started life as China Yellow Pages, the first “internet company” in China. In 1999, Jack Ma and 17 of his colleagues convened to create the Alibaba Group. When it came time to develop the trademark e-commerce platform, Alibaba founders elected to outsource the task to a US contractor. Ironic, given that China is now one of the leading tech outsourcing destinations. But at the time, IT talent in China was scarce, and the US labor pool had just the skills Alibaba was looking for. Outsourcing also helped the company get around the strict internet restrictions imposed by the Chinese government in the early 2000s.
Apple is another iconic tech company that greatly favors outsourcing to in-house work. Founded in 1976 by Steve Jobs and Steve Wozniak, Apple has pioneered countless cutting-edge technologies and innovations through its wide range of software and hardware products. The company is credited by many with ushering in the modern age of personal computing and smartphones. Today, Apple has the lion’s share (48%) of the US smartphone market, and it just shipped 7.2 million Macs in Q1 2022.
Part of Apple’s massive success rides on its outsourcing strategy. While Apple is based in the US, its complex supply chain relies on several foreign connections. Most Apple products, including apps, gadgets, and computers, are engineered and developed overseas, mainly in China, India, and Germany.
The two main reasons Apple opts to outsource certain stages of its hardware and software development are speed and operational efficiency. Tapping into a global talent pool enables this tech giant to roll out millions and millions of flawless consumer units every year.
Launched in 2003, Skype is one of the pioneers of user-based VoIP and video conferencing services. It had a bit of a rocky start and ended up getting acquired by eBay in 2005. Later in 2011, Microsoft bought Skype for $8.5 billion and integrated it into various systems, including Windows, Microsoft 365, and Xbox. The platform now has 300 million monthly active users.
All this was only possible thanks to three Estonian developers: Ahti Heinla, Jaan Tallinn, and Priit Kasesalu, who were outsourced to develop Skype’s backend. They borrowed ideas from a music-sharing platform they had developed earlier to quickly code Skype’s engine. The three later became partners in the venture.
Why do big tech companies outsource IT services?
You probably didn’t expect the likes of Google, Microsoft, and Apple to outsource tech services. After all, they have more than enough resources to hire as many in-house employees as they like. Plus, many job seekers would jump at the first opportunity to work for such companies.
But they do contract a great deal of IT labor and services. And while lowering labor costs is a highly attractive perk of outsourcing, it doesn’t seem to be the main priority for big companies. From what we can gather, large brands outsource IT labor to draw exceptional expertise, supplement the internal workforce, tap into the global talent pool for creativity and inspiration, and improve operational efficiency.
Of course, IT and development outsourcing is not just for the big leagues. Companies of all sizes can enjoy the many benefits of IT outsourcing. In fact, a Clutch survey points out that 9 in 10 small businesses plan to outsource at least one business operation in 2022. Drawing from industrial insights and our own experience, we’ve worked out the main reasons businesses contract IT labor and services:
- Increase business efficiency – Outsourcing saves a lot of time and effort.
- Support development capabilities – The business can build powerful digital solutions by leveraging third-party developers.
- Reduce costs – It’s generally much cheaper to outsource than to hire new IT personnel.
- Drive digital agendas – Outsourcing software/web development is key to achieving enterprise digitization goals.
- Design a flexible workforce – An outsourced arrangement can easily be adjusted or scaled to meet specific needs.
- Access to experts – Outsourcing taps into international talent pools where you can find all kinds of skilled developers, engineers, and designers.
- Foster international ties – Working with overseas tech partners can bring unique value when tackling a multi-national software venture, such as a multilingual e-commerce platform.
Outsource IT with WeDevelop
Outsourcing is a labor and digitization solution that suits any business. Everyone is doing it, from tech giants to budding businesses. And with such attractive benefits, there’s no reason you shouldn’t outsource your company’s IT services too. But outsourcing can be a daunting task involving a lot of searching and vetting to find the right experts. And that’s where WeDevelop comes in.
WeDevelop is an IT and development outsourcing agency that simplifies the IT contracting process for US-based companies. We provide employers with highly qualified pre-vetted developers sourced from Latin America. The LATAM region takes the spotlight as a nearshoring hotspot for world-class technical expertise.
Our process is pretty simple. Just tell us the kind of project you want developed or the technical skills you’re looking for, and leave the rest to us. We’ll then recommend candidates matching your description from our pool of 200+ developers, designers, and engineers. You can augment your existing staff with our hand-picked experts or create a dedicated IT team. Alternatively, we can build a custom software/web application for you if you’re not set on hiring.