5 IT offshoring trends and tech industry shifts to watch in 2026

Companies building offshore teams are facing a different reality than they did just two or three years ago. Data engineering has become one of the most sought-after skillsets, and compliance concerns around what information AI can access are forcing CTOs to rethink their governance models entirely.

These are some of the IT offshoring trends Ryan Chana, Global Head of Advisory at The Scalers, keeps hearing about in his conversations with tech leaders and at industry conferences. While some are industry-wide shifts, they are also fundamentally reshaping how companies approach offshoring.

1. Rapid AI adoption reshapes teams and breaks the talent pipeline

Companies are cutting junior roles to save costs, breaking the pipeline that produces mid- and senior-level engineers. The logic seems simple: why hire 3-4 junior developers when one developer can handle tasks using AI tools? 

However, this doesn’t account for what happens in the future when those companies need senior developers, and there aren’t any because nobody hired juniors in 2026, 2027, 2028…

“There’s some confusion among tech leaders about AI adoption,” Ryan explains. “Data shows 90% of AI implementations fail to deliver value, yet companies are spending massive amounts of money with unclear objectives.”

This situation has three immediate consequences for offshore teams:

AI adoption is already affecting offshore team compositions, so the emerging trend of organisations setting up teams with fewer juniors is likely to continue for the foreseeable future.

2. Data engineering teams are the new gold standard

Tech leaders are hunting for data engineering talent because these professionals have foundational skills that translate directly into AI/ML roles.

“It’s much easier to train data engineers for AI work,” Ryan points out. “They already understand data pipelines and outputs and can be upskilled into areas such as model training. That natural understanding of how data is used in AI and what good outputs look like gives them a massive advantage when you need to upskill people into AI roles.”

According to the 2025 State of Analytics Engineering Report, AI tooling is by far the largest area of investment for data teams, with 45% of organisations planning to increase spending in the next 12 months. This AI push is driving massive growth in data teams – budgets increased for 30% of companies (up from just 9% the previous year), and 40% reported headcount increases (compared to 14% the year before).

Our internal data confirms the increase in demand for offshore data engineering roles. In Bangalore, over 200 companies are actively hiring for data roles, with 10,000+ positions open at any given time. Among active data engineering candidates in India, 32.5% are in Bangalore, more than any other city.

3. GCCs shift from cost centres to strategic innovation hubs

Last April we were at the Shared Services & GCC Week India 2025 in Bangalore and got the inside scoop on the future of GCCs. One of the insights we gathered is that these centres are moving from pure labour arbitrage to deeper domain expertise, transformation, and R&D work.

GCC success metrics have shifted from headcount and cost savings to basis-point impact on cash, margin, revenue, experience, and shareholder value. This repositions GCCs as decision-makers and value creators central to corporate strategy rather than transactional service units.

For example, PepsiCo’s GCCs in India now embed into supply chain, manufacturing, and marketing, and creates value far beyond cost savings.

AI adoption is spreading across GCC use cases: virtual agents, claims automation, personalised healthcare, cash engines, product-quality monitoring, and payroll accuracy. But here’s what Ryan sees changing: “Entry-level, repetitive, and transactional work is already being automated. Jobs are transforming. Future GCC talent mixes tilt toward transformational and strategic roles requiring business context, problem-solving, tech fluency, and the ability to validate and augment AI.”

4. Cybersecurity profiles will be in high demand

It seems that when reading articles on IT offshoring trends, cybersecurity always finds its place. This year is no different.

Once again, we expect a significant rise in demand for cybersecurity roles in offshore locations as threats increase and regulations tighten. But also because, like what’s happening with other roles, there’s a worrying talent and skills gap.

The World Economic Forum’s Global Cybersecurity Outlook 2025 revealed that only 14% of organisations have adequate skilled talent to meet their cybersecurity objectives. The report also found that two-thirds of organisations are vulnerable to breaches and cyberattacks due to a lack of critical skills.

The consequences of this talent shortage directly affect breach costs. According to the IBM Cost of a Data Breach 2025 report, companies with high-level security skills shortages saw average breach costs of $5.22 million compared to $3.65 million for those with low-level or no shortages. The difference is $1.57 million directly attributable to the skills gap!

This talent crunch is pushing CTOs to look beyond their local markets and build offshore teams in locations with established cybersecurity talent pools where they can actually find the profiles they need.

5. Data sovereignty and AI governance force new compliance frameworks

Companies are adopting AI faster than they’re figuring out how to govern it. The result is a regulatory maze where the rules change depending on which country their data touches, and mistakes carry steep penalties.

The regulatory landscape is tightening globally. In Europe, the EU AI Act came into force in August 2024, with high-risk AI system rules taking effect between August 2026-2027. 

As per the 2024 Data Security Directions Council Report, 137 out of 194 countries have legislation in place to secure data protection and privacy. Here’s what this means in practice: a business based in the US must comply with the EU’s General Data Protection Regulation (GDPR) if it collects data from individuals in France. If that same company gathers data from a customer in California, it must adhere to the California Consumer Privacy Act (CCPA). The complexity multiplies when you’re operating offshore teams across multiple jurisdictions.

Given the circumstances, organisations that go offshore will likely start to establish governance frameworks before their teams start using AI tools. This involves defining which AI assistants are approved, where data can be processed, and how to audit AI usage.

“Companies need clear policies on what AI solutions their offshore teams are allowed to use,” Ryan emphasises. “If your offshore team is feeding sensitive data into AI tools that store information in jurisdictions you don’t control, you’re creating compliance and security risks you might not even know about and shadow IT further complicates that process.”

What these IT offshoring trends and industry shifts mean for your business

The trends we’ve analysed in this article are already changing how companies build offshore teams. To tackle them, you need the right talent. And more importantly, an offshore development partner that helps you source, hire, onboard, and engage that talent.

At The Scalers, we’ve built over 130 teams in Bangalore over the past decade and helped industry leaders like Preqin, a global alternative assets data provider. With our ongoing support, the company scaled to a 450+ R&D Centre in Bangalore that included 300+ data engineering professionals.

We wanted to have our own team and make it very ‘Preqin’ and we wouldn’t have been able to build that team so quickly without The Scalers. They handled all of the hassles so we could spend our time building quality software and collecting quality data. And we wouldn’t have grown as Preqin without the team in India.

Daniel Barnes

EVP, Global Head of Operations, Preqin

Are you considering building or scaling an offshore team? If so, send us a message. One of our senior executives will contact you promptly to talk about your unique needs.

We recommend you also check our comprehensive guide to offshore software development or read about the broader digital transformation trends reshaping the tech industry.