According to Gartner’s analysts, in 2020 the world costs in this field will increase by 5%, up to 1.08 trillion US dollars, and in 2021 they will reach 1.14 trillion US dollars (+5.5%). But in the current economic situation in the world, it’s hard to predict anything globally. The IT services segment and the entire software development market are changing very rapidly.   

We can say for sure that in 2020 the demand for AI-based solutions is expected to grow, which has been a steady trend during the last couple of years, particularly for mobile solutions.

Thus, what makes the costs grow?

There are two factors that directly influence services costs in IT companies.

The first one is the growing demand for automation solutions. And another one is the lack of qualified employees that increases in all areas of the digital economy.

This is mainly related to a number of trends:

  1. The pay rise in insourcing structures of large enterprises and outflow of specialists from integrators to insourcing companies.
  2. The increase in the amount of projects and growth of their complexity due to the automation level advancement.
  3. The lack of specialists.

Therefore, the first conclusion is the costs for software development will continue to increase both in 2020 and 2021.

The development costs will only increase. The possible drop in prices could be related to the transition to object-oriented programming languages, but, in practice, the cost reduction hasn’t occurred yet and is still not happening now. Thus, we can expect that in the next 10 years, software development costs will only grow.

Now let’s see in which field the development will be in most demand and therefore most expensive.    

Among AI systems, relatively simple, mass products will be popular that will be more often available on the cloud, and also complex, unique solutions, where advanced, and thus most expensive, technologies and algorithms will be applied. The latter category can lead to the rise in costs for custom software development and high qualified IT services. Specialists with the most advanced technologies (which are constantly getting more complicated) will still be in high demand. The interest in such experts is traditionally strong, and their costs will continue to increase. On the other hand, a steady growth in the amount of professional teams able to implement and customize off-the-shelf and cloud products with AI elements will form a new trend. It will lead to the reduction of an average price for AI products and services for their customization according to customers’ requirements.   

The second conclusion is popular solutions based on artificial intelligence will steadily reduce in prices as soon as expert teams and companies enter the international market. 

New promising technologies, having entered the market and become much in demand, cost more due to their popularity and the lack of companies or specialists able to implement these innovative technologies. As their popularity and demand increase, the number of potential service providers grows as well, leading to equation of prices that correspond to mid-market prices based on the cost per hour for a specialist.     

So how will the global IT service market develop?

It is obvious that the costs for IT services will continue to grow. The costs reduction is only possible due to some kind of revolutionary breakthrough invention able to drastically decrease the labor input required to build an end software product. However, today we don’t observe any revolutionary breakthrough.