The Most 10 Interesting Outsourcing Facts & Statistics

Linh Nguyen

Linh Nguyen | 24/09/2020

The Most 10 Interesting Outsourcing Facts & Statistics

You might understand software outsourcing, but you might not know these facts. Here are 10 most interesting outsourcing facts and statistics you might not know.

Outsourcing is one of the best methods for businesses to locate top talent at an affordable rate. With competition thriving, companies need to work hard and implement effective strategies to stay on top. Hiring remote workers can surprisingly save your industry a lot of money and, at the same time, get you quality work done.

If you are looking into outsourcing, you need to do some research to understand that there is more to this industry than meets the eye. Thus, in today’s article, we will cover the 10 most interesting outsourcing statistics over the last couple of years, and for the future.

10 Interesting Facts About Outsourcing

Even though Global IT Outsourcing revenue was unstable in the past, nowadays, the market seems to be stabilizing, having reached 92.5 billion dollars over the last year. Here are some interesting facts about the outsourcing industry:

92.5 billion dollars Growth of global IT outsourcing market today

1. More than 93% of organizations are improving IT outsourcing by adopting cloud services

IT Outsourcing (ITO) has more than 55% of shares in the outsourcing industry. Functions such as data entry, web design and hosting, application development, help desk, and even tech support have a long history of outsourcing. More than 50% of all IT outsourced teams and freelancers deal with cloud delivery, a technology transition which most businesses are taking.

Cloud computing is evolving at a rapid pace due to the considerable changes it brings to businesses. It involves a network of servers hosted remotely on the internet that stores, manages, and processes a firm’s data. Enterprises are adopting his technology since it saves costs on hardware and the expense of running a data center. Outsourced cloud computing services fall into these three categories:

Outsourced cloud computing services categories

Infrastructure-as-a-Service (IaaS)

It is the most basic category that allows you to rent IT infrastructure from a cloud provider and pay-as-you-go.

Platform-as-a-Service (PaaS)

It is the environment supply for developing, testing, and managing software applications without worrying about the underlying infrastructure such as servers, storage, etc.

Software-as-a-Service (SaaS)

It is the delivery of software applications over the internet as per demand on a subscription basis.

2. The main challenge for companies considering or already outsourcing cloud services is data security

The benefits of businesses moving to the cloud are overwhelming, from increased efficiency and reduced costs. However, it is not risk-free. The main concern associated with cloud computing is information security. Cyber attacks are on the rise, and cloud computing exposes businesses to these attacks.

Data breaches are accelerating swiftly due to hackers teaming up to form groups that seek monetary gains. They may be disgruntled employees, cryptocurrency miners hijacking computers, or even nation-state hackers that are politically motivated. If you are looking to benefit from the cloud technology, and at the same time, staying safe from all kinds of vulnerability, you need to invest heavily in security.

Many organizations do not have enough workforce to run a cloud security team. There are plenty of tasks such as checking automated threat alerts that come in through cloud security platforms. If security threats go undetected, a business becomes exposed to unchecked problems. 68% of companies opt to outsource cloud security teams such as Oracle Paladio, Threat Stack’s Oversight, etc. to help them monitor security in real-time without using more company resources.

3. 80% of Americans say that outsourcing is hurting American employees

Job outsourcing helps US companies keep up with the competition in the global market by allowing them to sell their products in foreign markets through their overseas branches. They mainly hire employees in emerging markets with lower standards of living. It helps them get quality work at an affordable price.

In 2015, there were more than 15 million outsourced jobs in the US, which is more than double the number of unemployed Americans. Donald Trump initially promised to bring back jobs in 2016. He did this by imposing tariffs on imports from both Mexico and China. It started a trade war that saw a hike in the prices of imports from North American countries.

The four primary industries impacted by the outsourcing of jobs in America are:

Industries impacted by the outsourcing of jobs in America
  • Technology – IT jobs are mainly sent to China and India because the wages are much lower and the skills similar
  • Call centers – these jobs seem to be coming up since wages in India are catching up to those in the United States
  • Human resources - outsourcing human resources jobs helps reduce health benefit plans, workers compensation insurance, and retirement plans by pooling thousands of businesses
  • Manufacturing

Despite the rising volume of outsourced jobs in the US, foreign companies outsource jobs to the United States as well.

4. More than 94% of organizations use some form of IT outsourcing

Outsourcing IT-related business processes is one of the best strategic ways to handle tasks that are traditionally handled by internal staff. Surprisingly, even IT companies outsource some of their services. There are lots of innovative IT outsourcing companies all around the world that can ensure the best use of technology for both small and big IT companies.

Expected IT market size by 2021

According to a Statista report, the IT market size amounted to slightly more than $120 billion in 2019, with the IT outsourcing industry valued at $92.5 billion. It is estimated to rise to $413 billion by the end of 2021. Out of this, 70% is expected to come from outsourcing.

Technology is evolving rapidly, and companies need to keep up with the competition by optimizing internal processes. The IT outsourcing industry’s future looks bright, with a diverse range of opportunities. There is eventually going to be a growth in strategic partnerships between IT outsourcing companies and businesses with much focus on outcomes.

5. Manufacturers outsource an average of 70% to 80% of their finished products

The need to cut in labor costs has pushed even manufacturing companies to outsource some manufacturing processes by hiring outside your company to assemble parts or build an entire product. Business owners need to evaluate the costs required for internal processes before making an outsourcing decision. A company struggling with redundant activities or processes might experience little to no profitable growth. Before choosing any company to satisfy your needs, it is essential to look into key suppliers and keep the following things in mind:

  • Outsource to a company with almost similar business philosophies and management styles{:.mb-md-5}
  • Focus on the best services before prices

China is an example of one of the most low-cost manufacturing regions where most manufacturing companies, entrepreneurs, and retailers outsource their services.

6. Many companies are seeking to automate their processes with Robotic Process Automation (RPA)

Robotic Process Automation (RPA)

The rapid rise of robotic process automation is rumored to lead to the death of business process outsourcing. It is natural to wonder if robots will soon be taking over the work, so many companies currently outsource their workload to BPO firms. RPA uses rule-based algorithms to automate specified processes on enterprise software and mainframe systems.

However, this evolution will look more like many evolutions in technology we have had before. Many inside the RPA industry see this as an opportunity rather than a threat to BPO. Automation of processes in an organization is mainly beneficial to business owners. Still, this technology benefits employees in the following ways:

  • Employees get to focus on more complex tasks or involve themselves in new projects by reducing repetitive and tedious tasks that slow them down
  • Improved accuracy through the elimination of errors that may be unavoidable in manual performance
  • Improving and simplifying processes
  • RPAs can work 24/7 hence increasing quantity and speed of work

RPA market revenues are expected to reach $2.9 billion worldwide by the end of 2020.

7. India still leads in global outsourcing

India still leads in global outsourcing

India has, for long, been the most preferred choice for offshoring and outsourcing, especially for English language operations. It has proven to be the most mature market for service outsourcing with a history of data processing, data entry, virtualization, and other top skilled services.

More than 59% of businesses globally are already outsourcing some form of service in India. The most common forms of outsourcing relate to IT or BPO (Business Process Outsourcing). Technical support teams, software developers, and infrastructure are highly sought after. Their services are much cheaper and as effective and valuable as employing a local group.

The talent pool in India is highly qualified to respond to the needs of the IT/ITeS industry as well as other fields. There is no limitation caused by language barrier since the country has over 100 million English speaking people, the second largest after the USA. Every year, there are more than 150,000 engineering graduates that join the IT industry, and this ensures unlimited availability of services.

8. More than 40% of help desk positions in the banking industry are outsourced

Help desk services require providing consumers with impeccable technical support in their time of need. Some organizations’ budget does not allow an internal help desk solution to support customers. It is the main reason why help desk outsourcing is considered as a solution.

55% of customers are likely to get attracted to excellent customer service, with 85% ready to pay more for an upgraded help desk experience. It shows how important it is to provide satisfying customer support services. There are several mind-blowing benefits that organizations enjoy from help desk outsourcing.

Help desk positions

  • Internal support teams can be very effective, but such teams can’t provide 24/7 help desk support. Outsourcing offers a team of experts working in different shifts.
  • Internal support staff may lack the experience to bring all calls to a resolution. Outsourcing gives you experts with better call management skills who deliver excellent solutions to your customers.
  • With the latest technologies, it has become easier to cut down response time by immediate dispatch.
  • Outsourcing help desk services reduce costs of labor, technologies, tools, and customer losses.

9. Freelancers represents 40% of the workforce in 2020

From a Forbes research, it shows that the current representation of freelancers within the workforce is between 35% and 40%. The recent numbers in the freelancing world also show a spike in revenue. The reason for this is that freelancing is more appealing to employees that prefer a flexible working schedule with more freedom for creativity.

Working on specific projects you like and also setting your hours do not only give you freedom but the time and ability to maximize your skills and provide outstanding services. Outsourcing freelancers are very common because of the quality of work they bring. Since competition among them is also high, it is possible to get the right freelancer at a very affordable rate.

There are freelancing platforms that provide freelancers with approximately 70% of freelancing jobs. Companies use these platforms to outsource the most affordable freelancers for the best quality work. They even offer features for interviews before hiring.

10. Business Process Outsourcing (BPO) expected to hit over $400 billion by 2027

Business Process Outsourcing (BPO)

Today, industries such as health, e-commerce, tech, and many others rely on BPOs to help streamline their internal processes. Most BPO activities that get contracted externally are in-house business functions such as human resources or front office needs. Both big and small companies, about 59%, are gradually embracing outsourcing as a cost-cutting tool. In return, the BPO industry continues to grow immensely.

BPO business analytics provides the forecast for the current and expected industry trends. This data comes from observation, evaluation, and analysis of current business trends, technologies, and other essential factors that impact the industry’s revenue.

Even as technology continues to get rid of some business opportunities through automation, new jobs are being needed. The IT industry, which is the most outsourced industry, requires employees and freelancers to keep up to date with the current trends in technology to provide high-quality services. Partnerships between companies and outsourcing companies, both locally and internationally, are also on the rise.

The outsourcing industry is expected to provide employment opportunities to millions of individuals in the coming years. More jobs are being transformed to follow the technology advances, hence, it is a high time for people to adopt the trend of remote contract work and employment.

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