Introduction
The United States outsourcing statistics show that American corporations routinely send customer service and IT jobs offshore, where they can get the same outcomes for a fraction of the cost.
Outsourcing is assigning internal business functions, workflows, or processes to an external company (third-party contractors or vendors) to increase efficiency & productivity. It has become popular as the prime source of capitalizing the business, focusing more on the quality work strategy for many companies like manufacturing, IT services, customer support, retail, E-commerce, etc.
In today’s global economy and labor market, there is tough competition among industries to acquire the top positions. Recent studies of IT outsourcing trends and statistics show that hiring remote employees or outsourcing agencies has significantly reduced costs.
For many developing countries, outsourcing work covers many sections of their increasing economies.
The History of Global Outsourcing Market
Outsourcing has a vast history since the 18th and 19th centuries when middle east manufacturing industries like printing and bookbinding services were outsourced to the neighboring countries, which paved the way to reduce costs to more than half with a significant increase in efficiency and business productivity.
In the 20th century, the global outsourcing market expanded to conduct core business functions. It gave rise to international telecommunication sectors like call centers, BPO services, and customer services, making it easier for enterprises to outsource jobs anywhere.
Many IT industries prefer these outsourced services that take advantage of the specialized skills available at a lower cost in countries like China and India. Rooting their core business plans, international outsourcing acted as a catalyst for leading companies like Accenture and IBM.
It also became the cause of many jobs lost in the home countries and led to language and cultural barriers between outsourcing processes.
Top Benefits of Global Outsourcing Services
Outsourced processes in the global market bring out many benefits for outsourcing providers and partners:
Cut down labor costs: The key outsourcing statistics show that businesses are now more accessible to specialized skills at a lower price than getting the work done from internal sources. The outsourcing efforts help them strategize their business growth plans effectively.
Specialized skills: Now, business executives and human resources can recruit candidates from outsourcing destinations to improve service quality by hiring potential employees for the company.
Increased productivity: Outsourcing services have become a key booster to conduct business operations much faster than expected, thus fetching great productivity for small companies targeting different development goals.
Competitiveness: The business process outsourcing market is open for all domestic and international businesses, making them plan strategic goals to stay innovative and competitive in their core industries.
Scalability: The global outsourcing market is expected to scale up the business needs of many startups and outsourcing partners. It can help them in bringing agility and flexibility as per growing trends.
With more and more industries across the United States searching for the best ways to accelerate their profit margins, cut costs and focus on development plans, outsourcing deals have become productive for many small and large-scale companies worldwide.
Artificial intelligence, robotic automation, and cloud computing are also transforming the outsourcing industry, enabling companies to digitize their routine tasks to save time and money.
Why do companies outsource?
Nowadays, outsourcing can be done internationally or domestically. But the big question is why companies or businesses outsource their work when they can hire internal teams or employees.
The answer is “Quality work at minimum cost.” Businesses targeting fast-paced development are more aligned to have skilled workflow expertise and are more productive in scaling up their agility and efficiency. Outsourcing is one of the best ways to locate top talent worldwide at an affordable price.
In 2022, many businesses outsourced their services and spent over $700 billion on outsourced jobs.
According to a recent survey of the business process outsourcing market, around 300,000 United States jobs are outsourced annually.
The global outsourcing market has been evaluated at $92.5 billion, paving the way for more companies to stay ahead.
The U.S., one of the top outsourcing destinations, has a market value worth $62 billion of the total international revenue.
66% of the United States outsourcing businesses have at least one department inclined to the outsourced jobs.
59% of companies depend on outsourcing providers rather than in-house security teams.
Information technology is the leading outsourcing industry with a great dependency on outsourcing business processes to cut costs and increase benefits. 13.6% of the average IT department budget is dedicated to outsourced tasks.
Business Process Outsourcing Market Stats in 2023
Two leading industries have dominated the large and small business outsourcing statistics all over the world:
- Business process outsourcing (BPO) includes payroll, digital marketing, logistics, and customer services.
- IT outsourcing (ITO) includes web hosting, data backups, web hosting, and cloud computing services.
The national and international outsourcing statistics forecast the current and expected industry trends in 2023.
$700 have spent on global spending outsourcing jobs
Overall, global businesses outsourced their requirement with a budget of $700 billion in 2022.
In today’s time, IT outsourcing spending is expected to reach $519 billion in 2023, with a significant increase of 22% from the last year’s overall spending.
However, the outsourced spending on business processes is expected to reach $212 billion in 2023, a 19% increase from the budget spent in 2019.
There is an increased focus on core functions benefitted many outsourcing companies
Respondents were asked, “How does your company get the benefits of outsourcing?” in the Global Outsourcing Survey conducted by Deloitte. Came up with an observation that 65% of outsourcing work has helped them align more focus on important business functions. With this, they have gained a great benefit with 63% cost-cutting in the overall budget.
According to a Survey conducted by syntax, 83% of IT leaders are outsourcing their security efforts
The leading IT teams focus on staff reductions, cost cutting, and cyber security while outsourcing their work to increase efficiency. According to last year’s survey, 91% of IT professionals have their in-house security teams for cyber security, and 83% of companies are still looking for outsourcing modes.
According to Napeo’s outsourcing survey, companies can save an average of 27.2%
Companies hiring professional employer organizations (PEOs) have been reducing costs by outsourcing HR functions like recruiting, hiring, unemployment claims, and compliance.
Recent studies show an average cost savings of 27.2% from hiring a PEO in the company.
In Matchboard’s survey conducted in the Philippines, 9% of the GDP raised from business process outsourcing
Last year, around one million Filipinos worked on outsourced jobs, a significant rise of $27 million, making up almost a tenth of the Philippines’ economy.
In the Philippines, there is a 97% literacy rate which makes them bring out their productivity to work at different professional ends.
On average, a Filipino graduate can earn around $300 per month. The low minimum wages help to attract many companies seeking to move their business functions offshore.
Many payroll services have been outsourced to the Philippines, cutting down labor costs by 70%
There are two selling points in the Philippines: a skilled workforce and low-cost living. It has become the main source of getting outsourced jobs in the Philippines.
For example, Filipino software developers earn an average salary of $7,174. However, American software developers earn $69,589. It means Filipino developers are working at 10% of the cost of an American developer.
According to Statista, the accounting budget of The service outsourcing industry in China is worth over $175 billion
Three years back, in 2020, the outsourcing industry in China was valued at $175.35 billion, resulting in a 65% increase in lending outsourced jobs.
Every year, more than one million professionals join the services outsourcing industry in China (Statista)
There is consistent growth of outsourcing industries in China which has provided a great platform to approx. 5000 new companies. The outsourcing market is expected to generate millions of new jobs annually, creating many opportunities for skilled employees and jobseekers.
According to the survey conducted by Statista, the BPO market in Japan is approaching $38 billion by 2025
In Japan, the business process outsourcing market of the BPO sector has been growing at a modest 2.28% CAGR. It gives rise to trillions of Yen in marketing and sales every year.
As per the recent studies of Clutch, 37% of small businesses have been outsourcing at least one business process
In 2019, over 1/3rd of small businesses in 2019 outsourced their business processes or workflows.
Over half (52%) of the companies have at least one business process in the forecast work.
Small businesses of Accounting and IT services have become popular outsourced processes for many large-scale organizations (Clutch)
According to the last year’s survey, 37% of small companies outsourced accounting and IT services. Other small businesses which are involved in outsourcing their work processes include development (28%), customer support (24%), digital marketing (34%), and human resources (24%).
As per computer economics studies, 60% of organizations are looking forward to outsourcing for software development
App developers all around the world have expertise in coding and development. Their vast knowledge and expected high salaries have made app development a focused area of outsourcing.
It is also observed that outsourcing rates vary across industries. Around 72% of organizations outsource app development in the financial or banking sectors. However, healthcare companies have reduced their outsourcing work by 31%.
According to Upcity’s outsourcing job survey, strong problem-solving skills have become the most important factor for many small businesses
Small businesses outsource jobs in the telecommunications sector have created creative ways and become the top selling point for many outsourcing teams. The BPO sector generated many jobs for newcomers and employees.
In the Upcity poll conducted in 2022, problem-solving skills edged out years of experience, overall cost, and online reviews.
India is one of the best countries to cut labor costs by outsourcing business services (Kearny)
India has become the prior choice for getting outsourcing work done. Measuring the Global Services Location Index- a tool to determine a country’s attractiveness for outsourcing business services, we have come up with many factors like skills and knowledge, financial attractiveness, business environment, resource availability, and digital resonance.
In India, many small businesses outsource jobs in the financial services sector had raised the highest GSLI score in 2021.
When small businesses outsource job requirements, the top 10 countries to cut down job costs in the Asia-Pacific region are India, China, Malaysia, Indonesia, Vietnam, Philippines, and Thailand.
70% of British Business to business companies prefer outsourcing their key business operations (Yougov)
In the United States, 34% of B2B organizations in the UK have outsourced IT support services. Now, the UK has become the world’s most commonly outsourced service provider. Apart from IT services, the other main outsourced services are printing (24%), payroll (28%), and accounting (24%).
Upwork is the new key to taking and providing outsourcing jobs, giving 36% Freelancers work rise in America (Upwork)
In the Covid era, the freelancing wave was a great rise in America, pushing skilled job seekers to start their freelancing work. Now, freelancers in the United States of America contributed $1.3 trillion to the US economy. Continuing on this pace, 56% of non-freelancers will consider freelancing in the future.
According to a 2022 ManpowerGroup survey, 75% of professionals face difficulty getting top talent in the United States.
The Grand View Research Report shows that the RPA market size approached $1.89 billion in 2021.
This market will expand at a compound annual growth rate (CAGR) of 38.2% from 2022 to 2030.
Business and outsourcing companies use artificial Intelligence to automate repetitive tasks, calculations, or replying to messages.
A 2022 Grand View Research survey reported that artificial intelligence had become the new outsourcing wave, helping providers to handle their customer services via Cloud-based IVR or Chatbots. It will increase the market size up to $93.5 Billions in 2021 and will expand at a compound annual growth rate (CAGR) of 38.1% from 2022 to 2030.
In the post-pandemic world, Industries prefer nearshoring to outsourcing their work.
According to the Inter-American Development Bank (IDB), nearshore outsourcing will add $78 billion to export sectors in the Caribbean and Latin America after 2023.
As per the survey conducted by the Global Call Center Outsourcing Market’s 2022-2026, the call center outsourcing sector will approach $21.72 Billion, accelerating a CAGR rate by 3.96% during 2022-2026. These outsourcing services will enhance the customer experience and lowers operational costs significantly.
Companies now prefer virtual assistants (independent contractors working remotely on scheduling appointments, completing administrative activities, etc.). According to Technavio, the global virtual assistant market will grow by USD 4.12 Billion at a CAGR of 11.79% between 2021-2025.
Conclusion
The study of top outsourcing statistics shows that the outsourcing market is growing faster, giving rise to many companies looking to increase their productivity, improve their efficiency, and at the same time, cost-cutting with broad access to specialized skills and core competencies.
Global outsourcing for small businesses, cloud services, BPO companies, and payroll services has tremendously increased post-pandemic. Studying these market value stats and global outsourcing deals can guide you in strategizing your plan to start your core business plan in 2023.
The detailed knowledge of global outsourcing statistics makes you aware of outsourcing companies’ business growth areas and financial benefits, enabling a focus on data security and service quality.
Frequently Asked Questions (FAQs)
What is outsourcing?
Outsourcing can be termed as relocating, redirecting, or assigning the organization’s internal work requirements or duties to an external party.
There can be two types of outsourcing processes:
BPO (Business process outsourcing) – relocating operations to a service provider or company outside the organization.
ITO (Information technology outsourcing) – relocating IT-based workflows, needs, and responsibilities to an external company with the same offerings.
What is the success rate of outsourcing?
Around 78% of businesses have come up with a great success rate in outsourcing their work requirements, which counts for three-quarters of success in operations.
What countries outsource the most?
A recent survey of outsourcing statistics and facts shows that the United Kingdom and the United States are the countries with leading countries to outsource the most.
In the U.S., 68% of companies outsource their requirement.
In the UK, 48% of companies outsource their work.
When evaluating outsourcing deals, the United States covers 84.2% of data compared to the UK, with 5.2% evaluation.
What are the recent trends in outsourcing?
There are recent trends in outsourcing to follow, which can help in making the best decisions:
- Prioritizing quality
- Business adaptability & flexibility
- Opt advanced technology
- Robotic process automation
- Cybersecurity
- Cloud computing
- IT outsourcing
- Remote work
- Cost reduction
- Customer experience & satisfaction
- Workflow transparency
- Artificial intelligence & machine learning
