According to the Belitsoft custom software development company, the backend development outsourcing market in 2026 will see strong growth due to technology megatrends and changes in the job market. Companies in North America and Europe are using outside providers not only to save money, but also to gain access to specialized knowledge in cloud, AI, data, and industry-specific areas.

Factors that Drive Growth and Changes in StrategyLack of Workers and Rising Automation

Because there are not enough engineers, particularly in cloud, AI/ML, and cybersecurity, companies have to look for them outside of their own companies. According to McKinsey, a large number of companies need a multidimensional sourcing strategy that includes outsourcing, insourcing, and automation. Generative AI is changing the world in its own way. For instance, 83% of executives say they already use AI for tasks such as code generation and testing automation, which they often hire out to outside teams. This AI-powered outsourcing does not eliminate the need for skilled people, but it does enable outside teams to work faster.

Industry-Specific Digitalization

Customers want verticals to adopt new technologies more quickly, and competition is pushing them to do so. FinTechs are creating new digital banks, health systems are starting to use telemedicine, insurers are using AI analytics, and car companies are racing to make electric cars that can communicate with each other. In each case, outsourcing acts as a force multiplier. For example, a recent Deloitte fintech survey found that firms explicitly plan to use outsourcing to accelerate growth and build new services on top of GenAI and cloud.

Geopolitical and Supply Chain Issues

Businesses do not want to depend on just one area because of factors like the pandemic, trade tensions, and wars. As a result, nearshoring and regional centers are becoming increasingly popular. Meanwhile, companies in North America are investing more in core projects in Latin America and the U.S. Companies in Europe, on the other hand, rely on partners in Eastern Europe and North Africa.

Deloitte notes that Global In-house Centers are experiencing a comeback, especially in Asia, along with insourcing. This shows that companies are seeking greater control. Procurement teams, in particular, are demanding transparency and risk management – a situation that often favors outsourcing to allied countries or local firms.

Best Practices for Making Outsourcing WorkSet Clear Goals and Limits

Don’t outsource everything. Align projects with specific tasks that need outside help, such as moving to the cloud or developing an AI model. Companies are selectively bringing non-core work in-house to gain more control, and they should do the same with outsourcing by focusing on well-defined, outcome-oriented deliverables.

Choose the Right Model

Choose between onshore, offshore, or nearshore based on your talent needs, time zone overlap, and the rules that apply to your business. For instance, work that is heavily regulated, like banking or health data, may be safer onshore or in a trusted area. On the other hand, work that is heavily focused on development can go offshore. TechRepublic data suggest that U.S. firms are increasingly blending models – some work goes to domestic teams, while other tasks go to global vendors.

Embrace Agile and DevOps

Work with engineers who use the latest techniques. Cloud infrastructures, continuous integration/continuous deployment (CI/CD), and tools for collaborative work are all very important. According to Gartner and Deloitte, businesses want flexibility, so their teams need to be able to adapt and utilize automation, such as AI assistants like Copilot, to expedite delivery.

Invest in Governance and Collaboration

Even as you outsource, maintain strong vendor management, a concept often referred to as the "extended workforce". Deloitte recommends expanding the remit of Vendor Management Offices to cover the full ecosystem, including contractors and AI workers. For procurement leads, this means putting in place clear Service Level Agreements (SLAs), performance metrics, and rules for communication with each other. Develop a partnership mindset and ensure that knowledge is shared so that important intellectual property and best practices are retained.

Monitor Key Trends Continuously

You cannot simply outsource once. Be on the lookout for new trends, like generative AI tools, low-code platforms, or changes in the risk of geopolitical events. For instance, a new study by McKinsey suggests that AI has not replaced coders; instead, it has made developers more productive. You can change how you assign projects if you stay up to date. You could, for example, use AI-powered offshore teams for some tasks and reserve the most important work for your own staff.

According to research in the field, the best CTOs and procurement leaders will be those who can successfully bring together teams from different countries, utilize AI-powered tools, and manage a diverse talent ecosystem by 2026.

About the Author:

Dmitry Baraishuk is a partner and Chief Innovation Officer at a software development company Belitsoft (a Noventiq company). He has been leading a department specializing in custom software development for 20 years. The department has hundreds of successful projects in AI software development, healthcare and finance IT consulting, application modernization, cloud migration, data analytics implementation, and more for startups and enterprises in the US, UK, and Canada

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