In any industry, sustainable business development is now inextricably linked to the use of technology, particularly modern software.
However, not all companies have the resources to employ programmers and other technical specialists in-house, so outsourcing software development remains an attractive alternative for overcoming business technology challenges.
In this article, we share interesting statistics on software development outsourcing and the state of the industry in 2026. This data will be useful to anyone interested in this area or already using it for business development.
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• The cost of developers’ work in Eastern and Central European countries is increasing, reducing the price competitiveness of IT service providers in these regions. Therefore, in recent years, the focus has shifted towards niche expertise and the experience of development engineers.
• European Union countries account for about one-third of the global market for IT outsourcing contracts with a budget of more than $5 million. In terms of market capitalisation, it is second only to the United States.
• From 2020 to 2024, the European IT outsourcing (ITO) market grew from €18.8 billion to €28.4 billion in terms of contracts per year, with an average annual increase of 11%.
• By mid-2025, Ukraine — one of Eastern Europe’s IT hubs — had around 270,000 IT specialists. — DOU
• The software development market grew to USD 0.64 trillion in 2026 and is expected to reach USD 1.11 trillion by 2031.
• The engineering services outsourcing market is estimated to be worth USD 164.71 billion in 2026 and is expected to reach USD 312.65 billion by 2031, representing a compound annual growth rate (CAGR) of 13.68%.
• In 2025, large enterprises retained 62.41% of their spending, using their substantial budgets to fund custom development and negotiate volume discounts. SMEs are now active contributors to innovation curves that were once defined by Fortune 500 budgets.
• North America accounted for 38.13% of the revenue and continues to benefit from its concentration of Fortune 500 HQs, venture capital, and hyperscale cloud infrastructure.
• According to the latest forecast by Gartner, Inc., worldwide IT spending is expected to reach $6.15 trillion in 2026, up 10.8% from 2025.
• Cost reduction as the primary driver of software development outsourcing has plummeted from 70% in 2020 to just 34% today, as companies now prioritize talent access (42%), agility (35%), service quality (33%), and global delivery (33%) nearly equally alongside cost savings. — Neontri
• Recruiting a new IT hire typically costs 20–25% of that specialist’s base salary on average. However, this can range from 15% to over 40%, depending on the company and job position. — Indeed
• The cloud-based offshore software development subsegment maintains a dominant position in the market, accounting for approximately 74.2% of the market share in early 2026.
Image by Verified Market Research
• The BFSI (banking, financial services, and insurance) sector is a major consumer of software development services. Over 70% of banks and financial institutions invest in software solutions. — Global Growth Insights
• It is projected that offshore software development outsourcing will represent 45.24% of the global outsourcing market by 2028. — Statista
• The most common in-house hiring challenges for IT companies are scarce specialized talent, rising salaries, and fierce competition among tech firms.
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Lvivity is a trusted Ukraine-based software development outsourcing and outstaffing vendor. Ukrainian developers are not the cheapest “low-cost” option, but they offer a great price-to-quality ratio, with costs often being one-third of those in Western Europe or North America.
Are you looking to hire a software development team? Let’s discuss your requirements, and we’ll put together the perfect-sized team for you.
Last Updated on February 11, 2026 by Lvivity Team
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