The world of Virtual Reality (VR) and Augmented Reality (AR) are becoming the next digital strategy for organisations. VR is defined as a computer-generated simulation of a three dimensional environment or image. Here, the person can interact in what seems like a real or physical way by using special electronic equipment, such as a head-mounted display (HMD) helmet or sensor gloves (PNC, 2016). On the other hand, Augmented Reality (AR) means an experience of actual reality enhanced with virtual images or data which coexist with the real world (The Farm 51, 2016). However, with these technologies businesses are expected to transform the way the the organisations engage with customers and employees with a billion droller market ahead.

The opportunity

Until recently, AR and VR technologies have served primarily in gaming and entertainment industries. But, now increasingly, both technologies are finding more practical application in the enterprise level since they allow the digital content to be effortlessly imposed into the real world images. This can improve the real world through computer generated content that is connected to particular places or events. Therefore, advantages that VR and AR are carrying have made exceptional opportunities for businesses to move from the industrial niches to mass development (Farm51, 2016).

Paul Lee and Kevin Walsh explains (2016), businesses are taking the said technology and interaction model to new heights across several industries mainly including construction, health care, education, tourism and manufacturing etc in-addition to entertainment. The core would be the development of:

  • Communication and collaboration;
  • Training and simulation;
  • Field and customer service;
  • Customer experience and interactive marketing.

However, AR can help to seamlessly integrate technology with the real world while VR provides immersive simulated environments that help model complex, unsafe environments that are infeasible to explore in real life. Both can potentially create efficiency and drive innovation that impacts business value.

Challenge and technology

According to (2017), AR could become the primary driver of a $108 billion VR/AR market by 2021. Just as the Internet and the personal computer changed how business is operated, these upcoming technologies seem transforming business and industries on how we communicate, learn and collaborate in more meaningful way with multi-sensory experiences.

Further, AR and VR are having both consumer and business applications and some areas they both overlap. For ex: most video games development is in VR at present, but Microsoft Hololens is also developing AR games such as Minecraft. At present, for this market, Facebook and Oculus are planning to join with all major hardware vendors (Samsung, HTC, Sony, Microsoft, Google, Epson, LG) and  many other popular firms (Farm51, 2016).

VR and AR outsourcing

In terms of offshore outsourcing, CBI Report (2017) from Ministry of Foreign Affairs of EU reveals, why European companies may consider outsourcing VR and AR services on top of other IT services? It explains this is mainly due to:

  • “Cost reduction – For 64% of executives, cost reduction is their main reason for outsourcing VR and AR services. This gives companies a clear advantage, as labour is relatively cheap in developing countries.
  • Lack of in-house expertise and specialisation – VR and AR services require specific knowledge, technical skills and tools, which most companies do not have in-house. Specialised expertise is especially valuable. Specialisation in a specific vertical sector, or even a specific context within a sector, gives companies a competitive advantage”.

Nonetheless, CBI report (2017) adds, data security and intellectual property protection are of the utmost importance to companies. This is especially applicable to outsourcing VR and AR services, because software developers may have access to sensitive projects and information. In-addition, clear communication and firm contractual policies between customer and service provider also are essential factors to VR and AR services in particular. This will help reduce miscommunication cause misunderstandings and disagreements, which could lead to disputes between two parties.

Evidently, VR and AR market is growing rapidly. According to CBI report (2017) statistics revenues are expected to increase from €4.8 billion in 2016 to €150 billion in 2020 and this is a remarkable growth rate of 181%. Industry experts expect Europe will curve out a niche on the VR and AR market, along with Asia and North America. And Europe is to foresee to acquire a major share of the global market.


Technologies such as VR and AR are now moving beyond gaming and into the workplace. With a touchscreen and mobile-wearable devices, “real-world, real-life” experiences, virtual and augmented reality brings a new way of working, communicating and collaborating. For enterprises, these fiction fascination and potential capabilities of AR and VR technologies obviously bring outsourcing opportunities that would potentially reshape the IT industry within next several years ahead.