The importance of outsourcing can’t be denied. By now, numerous research studies have been published, and they yield some pretty fantastic outsourcing statistics.
We’ve compiled the most useful and interesting information so that you can see how common and vital outsourcing truly is. In addition, you will see how this industry behaves and what we can expect in the future.
This article could benefit business owners, especially those who already outsource tasks or just consider outsourcing them at the moment.
Let’s dive in and highlight everything you need to know about this industry in the US.
The Most Important US Outsourcing Statistics (Editor’s Choice)
- Over 60% of tech companies are outsourcing at least a part of their application development.
- Companies utilizing outsourcing can reduce their expenses by 20–30%.
- Outsourcing harms the US economy, according to 71% of Americans.
- Nike outsources the work to five countries.
- 93% of companies already have a multi-cloud strategy.
- Walmart has invested $10 million in moving manufacturing jobs back to the US.
- The US human resource outsourcing market is valued at $9.7 billion.
- The IT outsourcing industry will reach a $425.19 market value by 2026.
Outsourcing Trends — Stats, Facts, and Projections
Figuring out the latest trends in any industry sector is one of the main perks of analyzing statistics. With such information, you can see what areas of remote work are going to grow in demand. The outsourcing market is no exception to this rule.
In this section, you will find more about key trends that will affect both the global and the US outsourcing market in 2021 and beyond.
1. The outsourced customer care services industry will be worth $110 billion by 2024.
(GlobeNewsWire)
Outsourcing statistics have announced a significant growth of the outsourced customer care services industry in the next couple of years. For now, more than 50% of all companies employ third-party customer support representatives to improve customer experience. Apparently, outsourcing reliable customer support agents retains more clients.
2. 70% of transactions in the outsourcing market are digital-focused.
(Statista)
Most of the outsourcing market transactions are digital-focused, while only around 30% are pure traditional services. Various data on outsourcing show that this number hasn’t changed since the fourth quarter of 2019. In the third quarter of 2019, 66% of transactions were digital-focused.
3. Legal process outsourcing trends estimate that the worldwide LPO market size will reach $40 billion by 2024.
(Globe Newswire)
Research shows that the legal process outsourcing market size will rise with a CAGR of over 40% by 2024. Considering that this market size was $3 billion a few years ago, we can imagine how high this increase will be.
Newer LPO trends include uncovering the background information before entering into an agreement, and that’s possible because of AI.
4. More than 60% of tech companies outsource at least a part of their application development.
(Avasant)
Outsourcing statistics for 2021 show that application development is one of the most frequently outsourced IT functions. Simultaneously, data center operations, network operations, help desk, and desktop support are the four least outsourced IT functions in 2021.
5. 19.4% of marketers in the US have seen an increase in outsourced marketing activities.
(Statista)
A survey across 13 sectors in the US investigated whether the pandemic affected the outsourcing of marketing activities. The findings show that 58.8% of the respondents haven’t detected any change in outsourced marketing activities.
However, almost a fifth of the marketers have noticed an increase in the same activities.
Other Stats on Outsourcing
By examining and comparing data, we’ve been able to identify why companies in the US decide to use outsourcing as a business strategy. Again, we’ve covered data on outsourcing in some other countries for the sake of comparison.
Check out what happens with outsourcing in the US and worldwide.
6. A business owner can save around 60% of overall costs with outsourcing.
(Outsource Accelerator)
Business owners have multiple costs when hiring an employee from the US — recruiting, office space, equipment, training, benefits, paid holidays, and the like. So, they can reduce overall costs by outsourcing to other countries.
7. Business process outsourcing trends suggest that business process outsourcing (BPO) generates $26 billion worldwide.
(Statista)
Business process outsourcing is closely related to information technology outsourcing because many business processes are technology-based. Together, these two types of outsourcing generate $92.5 billion. Moreover, the Americas account for over half of this revenue. Additionally, Southern Europe has the largest share of business process outsourcing.
8. US overseas affiliates employ 14.4 million workers.
(BEA) (The Balance)
Job outsourcing helps US companies be competitive in the global marketplace. Therefore, they have overseas branches operating in foreign markets. Technology, call centers, human resources, and manufacturing are the four most often outsourced industries.
9. Outsourcing statistics by country say that companies outsourcing to the Philippines can reduce their wage payouts by up to 90%.
(Outsource Accelerator)
Research tells us that the Philippines has a much lower cost of living than other countries. So, foreign companies can cut their labor costs by outsourcing to the Philippines and still have well-paid workers.
For example, a software developer in the Philippines makes $7,174 annually on average. In the US, a software developer makes $69,589. This means that software developers in the Philippines earn 80% less than their US counterparts for doing the same job.
10. Jobs lost to outsourcing statistics say that over 37,000 jobs were lost due to outsourcing from March to July 2020.
(The Guardian)
Studies show that outsourcing has some bad sides as well. Many US citizens are aware of those. In fact, job loss is the main reason some people strongly object to outsourcing jobs outside the country.
However, the state of the matter shows us that the vast majority of companies still use it, even though US citizens might disapprove of outsourcing.
11. Offshoring trends show that Nike outsources the work to five countries.
(Outsource Accelerator)
Statistics show that Nike has a 47% market share globally, and its sales revenue is close to $3.7 billion. Interestingly, Nike doesn’t have manufacturing plants on its own. Instead, the company outsources the work to 500,000 people in the Philippines, Vietnam, China, Indonesia, and Taiwan.
12. 37% of small businesses outsource a business process.
(Clutch)
A report says that small businesses most commonly outsource accounting (37%), IT services (37%), and digital marketing services (34%). What’s more, US outsourcing statistics show that 24% of small businesses decide to outsource to increase efficiency.
13. Nearly 90% of survey respondents believe both providers and buyers will be focused on value and outcomes.
(BrainHub)
Both big and small business stats indicate that the value and quality of outsourced goods and services were the top priorities in 2020.
Also, 69% of respondents presume that outsourcing providers will work as systems integrators, which means clients will share the risk with providers.
14. 83% of IT leaders with in-house security teams consider outsourcing their security efforts to a managed service provider (MSP) in 2021.
(Syntax)
Outsourcing statistics suggest that outsourcing cybersecurity is becoming an attractive solution for IT leaders. In 2020, 77% of IT leaders reported more frequent cyber attacks. Unfortunately, many of them weren’t equipped to handle the attacks.
15. 92% of companies already have a multi-cloud strategy.
(Flexera)
While we can’t predict the future, one of the main IT outsourcing trends is related to cloud solutions. Many companies already use a multi-cloud strategy, and it has already become a must for almost every new company.
16. US companies have moved approximately 800,000 jobs to Mexico due to lower base wages and less strict business regulations.
(Aptude)
The number of jobs outsourced by US companies continues to grow. In fact, outsourcing all kinds of professions has been around for decades. Moreover, many organizations take advantage of hiring a low-cost workforce outside the US borders.
It is only natural that these companies will continue with this practice because of the benefits they get from outsourcing work to remote workers. Even though it could be potentially dangerous for the economy, outsourcing is here to stay.
17. One of the Walmart outsourcing facts is that the company has invested $10 million in moving a part of its manufacturing jobs back to the US.
(iti)
Walmart is one of the top five US companies that outsource jobs overseas. It puts effort into giving some of its manufacturing jobs back to the US employees. However, Walmart still collaborates with around ten thousand manufacturing plants in China.
Outsourcing Statistics by Industry
Outsourcing is common in manufacturing, customer service, and information technology. However, statistics show that some other industries outsource a part of their companies as well. Some do it to reduce their expenses, while others want to increase efficiency.
Let’s dive into the numbers.
18. The global data analytics outsourcing market is valued at $5.9 million.
(Allied Market Research)
Data analytics outsourcing means that companies receive data reports from a provider. These reports help enterprises make better business decisions. By 2028, the global data analytics outsourcing market will grow at a 34% rate and be worth $60.3 million.
19. HR outsourcing statistics tell us that the human resource outsourcing market in the US is worth $9.7 billion.
(StrategyR)
The human outsourcing market in the US is growing. However, China is a fierce competitor. As a result, its HR outsourcing market will grow at a 4.7% rate over the next few years.
Eventually, China’s human resources outsourcing market will probably reach an $8.2 billion size by 2027. Japan and Canada are another two HR outsourcing markets that will grow at a 4.4% and 4.2% rate during the same period.
20. IT outsourcing trends forecast that the IT outsourcing industry will reach $425.19 by 2026.
(Abto Software)
The IT outsourcing services market reached $318.5 in 2020. The demand for outsourced IT professionals has increased since then. The need for data security, process automation, and AI solutions has caused the growth of the IT outsourcing industry. Moreover, the estimated market value will take place at a CAGR of 4.5% per year.
21. The global recruitment process outsourcing market is worth $5.48.
(Grand View Research)
Based on recent research, the global recruitment process outsourcing market will most likely grow at an 18.5% rate by 2027.
22. Hospital outsourcing trends predict that the global hospital outsourcing market will expand at a CAGR of 10.78% by 2026.
(Globe News Wire)
The worldwide hospital outsourcing market size was $267.81 billion in 2019. Thanks to technological advancement and AI, hospital outsourcing is becoming more reliable. By 2026, outsourcing in this industry is supposed to reach $661.68 million.
The growth of the hospital outsourcing market is propelled by several factors — the high demand for reducing healthcare services costs, the rising need for advanced facilities, the rising R&D cost, and strict regulations.
23. Pharma outsourcing trends say that the CDMO outsourcing market will grow at a 9% rate by 2024.
(Business Wire) (Results)
Contract development and manufacturing organizations help the pharmaceutical and biotech industry by offering additional development capacity, specialty capabilities, and cost advantages. Due to the potential advantages over in-house manufacturing, the CDMO outsourcing market will grow by $44.17 by 2024.
24. The IT sector outsources 22% of help desk functions.
(Avasant)
Hiring help desk workers from a service provider is one of the services that helped establish the IT outsourcing industry. However, help desk outsourcing trends suggest that help desk outsourcing is not that frequent in the IT sector. As a matter of fact, barely a fifth of IT companies employ these positions from a third party.
Conclusion
After carefully considering all the stats we compiled, it’s clear that the outsourcing market will continue to grow. However, the actual effects of the US job growth are yet to be seen, given that outsourcing decreases the unemployment rate.
Moreover, technology development has made outsourcing much easier. It’s hard to tell whether sending jobs overseas has more pros or cons, but companies undoubtedly gain more profit because of it.
Frequently Asked Questions (FAQ)
What percentage of US companies outsource?
Around 30% of US companies outsource a part of their business. However, the outsourcing rate depends on the company. For example, IT companies in the US outsource most of their goods and services. However, manufacturing companies outsource from 70% to 80% of their finished products.
Even healthcare and legal industries outsource jobs, and 68% of consumer product companies use outsourcing. In essence, the US is one of the countries that outsource jobs the most.
Is outsourcing increasing or decreasing?
When all statistics are taken into consideration, we can say that outsourcing will continue to grow in the future. In fact, around 80% of logistic leaders plan to increase their outsourcing budget by 5%. As a result, the global LPO market size is expected to reach $40 billion by 2024, and it was only $6 billion in 2016. The worldwide hospital outsourcing market is expected to increase with a CAGR of 10.4% by 2027. These are just some statistics that can help us have a clear insight into the outsourcing rates.
What countries outsource the most?
India is undoubtedly the leading country in outsourcing. As a result, the Indian workforce is cheaper than in other parts of the world, and it’s possible to find inexpensive but quality employees. Some other countries are the Philippines (it’s important to highlight that most Indians and Filipinos speak English), Mexico, Argentina (it’s in the same time zone as some of the US states, which is beneficial), Ukraine, and Poland (known for the outstanding software developers).All these countries have many experienced and skilled workers who cost less than an American employee.
Why is outsourcing so popular now?
The benefits of outsourcing are multiple. First, it can help companies reduce costs by finding a talented workforce overseas to do the job for less money. Then, statistics show that outsourcing helps employees focus on the core tasks. What’s more, there’s less need for in-house staff training. Finally, technological advancement also enables companies to outsource jobs reliably and efficiently, contributing to outsourcing popularity.
Is outsourcing good or bad?
While some think that outsourcing hurts a country’s economy, many companies around the globe still do it. In fact, a lot of companies have managed to survive by outsourcing non-core business activities. So, a number of local employees kept their jobs. Companies indeed save a fortune by employing skilled foreign workers. This way, those companies reduce the global unemployment rate while enriching their teams.
Which country is best for outsourcing?
Choosing the best country to outsource to depends mostly on the industry. For example, a survey shows that India is the best country for offshoring. In addition, India’s business environment is attractive to many companies because of the people’s skills and availability. China is another popular outsourcing destination. Studies show that China’s outsourcing market grows by 30% each year. It’s famous for software projects involving data structures, Python, and functional programming. Moreover, outsourcing statistics highlight the Philippines as the country ideal for business outsourcing.
Sources:
Abto Software
Allied Market Research
Aptude
Avasant
BEA
BrainHub
Business Wire
Clutch
Flexera
Globe Newswire
Globe Newswire
Grand View Research
iti
Orient Software
Outsource Accelerator
Outsource Accelerator
Outsource Accelerator
Results
Statista
Statista
Statista
StrategyR
Syntax
The Balance
The Guardian
GlobeNewsWire
FAQs
What are the trends in outsourcing? ›
- Greater preference for remote working. ...
- Shift to cloud-based technology. ...
- Stricter cybersecurity protocols. ...
- More integration of AI solutions. ...
- Increased staff upskilling efforts. ...
- Implementation of Progressive Web Apps. ...
- Growing preference for nearshoring. ...
- Reliance on automation.
- Outsourcing Improves Performance. By hiring an outside accounting professional you have the option to select someone with a proven track record for success. ...
- Outsourcing Reduces Errors. ...
- Streamline Processes with Outsourcing. ...
- Outsourcing Has Access New Innovation. ...
- Outsourcing Lowers Costs.
The popularity of outsourcing is growing since it provides access to wider global markets. Smaller companies, thanks to delegating tasks, have a possibility to scale their business faster.
What percentage of companies are outsourcing? ›What percentage of U.S. companies outsource? 66% of U.S. companies with 50 or more employees outsource, while 29% of U.S. companies with fewer than 50 employees outsource. Furthermore, 68% of large U.S. consumer products involve outsourcing in at least one department of their organization.
What are the benefits of outsourcing? ›- lower costs (due to economies of scale or lower labor rates)
- increased efficiency.
- variable capacity.
- increased focus on strategy/core competencies.
- access to skills or resources.
- increased flexibility to meet changing business and commercial conditions.
- accelerated time to market.
- Define your outsourcing goals early. ...
- Select the right outsourcing engagement model. ...
- Work with the right outsourcing service provider. ...
- Start with teams as small as one to two. ...
- Establish a clear communication process. ...
- Provide the right training materials and tools.
- Cost Savings. “Cost savings is the main advantage that outsourcing brings in. ...
- Scale Quickly. ...
- Network Security. ...
- Focus on Growth. ...
- Remain Competitive. ...
- Grow Business. ...
- Delegate Tangential Processes.
Outsourcing also affords much growth in the foreign economy because of the influx of new money. Individuals who are working on an outsourced contract from another country inevitably have more money to spend.
What is the future of outsourcing? ›IT outsourcing spend could increase 22% over 2019's numbers to reach $519 billion in 2023. The global business process outsourcing spend could increase 19% over 2019's numbers to reach $212 billion in 2023. Grandview Research predicts that the business process outsourcing industry will reach $525 billion by 2030.
Will outsourcing grow in the future? ›The future of outsourcing in India will get the better of the worlds' leading outsourcing players because of augmenting access to vast internet penetration, huge remote workforce, superior talent, quality results, and great turnaround times at a low cost.
What industry outsources the most? ›
According to Deloitte's 2021 report, the most commonly outsourced services are IT services (54%), finance (44%), payroll services (32%) and customer service or contact centers (22%).
Is outsourcing increasing or decreasing? ›Global spending on outsourcing could hit $731 billion in 2023 (Deloitte) Overall, businesses are expected to spend over $700 billion per year on outsourcing by 2022. Breaking this down by segment, IT outsourcing spending is projected to reach $519 billion in 2023 — a 22% increase over 2019's numbers.
Did you know facts about outsourcing? ›Twenty-four percent of small businesses outsource to increase the efficiency of their business. Another 18% do so to get expert assistance; 16% do it to be more flexible; lastly, according to outsourcing statistics, 15% do it to cut and streamline workflow. Around 300,000 jobs are outsourced by the US annually.
Will outsourcing improve performance? ›Outsourcing back office processes ensures that tasks are carried out by professionals which can go a long way driving business performance and revenue. Improves Productivity: Outsourcing back office tasks can increase productivity by allowing your employees to focus on what they do best.
What is another word for outsourcing? ›...
What is another word for outsourcing?
| sourcing | deploying |
|---|---|
| redistributing | subcontracting |
| utilisingUK | utilizingUS |
Outsourcing can harm employee morale and company culture. While managers may see outsourcing as a cost-effective option, employees may feel like they are being replaced. They could also be confused as to why some company services need to be outsourced.
Is outsourcing a good business strategy? ›It improves efficiency, cuts costs, speeds up product development, and allows companies to focus on their “ core competencies”.
How do you implement outsourcing strategies? ›- Outline Detailed Outsourcing Goals. ...
- Budget for the Expected and Unexpected. ...
- Choose the Right Outsourcing Engagement Model. ...
- Mitigate Outsourcing Risks. ...
- Actively Track Outsourcing Progress and Added Value.
- Set well-defined objectives. ...
- Strengthen management relations. ...
- Ensure data security and regulatory requirements compliance. ...
- Improve conflict management processes. ...
- Communicate clearly and regularly.
The two biggest outsourcing issues that one should understand right away are: 1. You are outsourcing to another company and 2. You are (probably) outsourcing to another country. These bring up organizational and regional cultural differences.
Why is outsourcing important in a business? ›
Companies use outsourcing to cut labor costs, including salaries for their personnel, overhead, equipment, and technology. Outsourcing is also used by companies to dial down and focus on the core aspects of the business, spinning off the less critical operations to outside organizations.
Why does outsourcing fail? ›Outsourcing often fails due to conflicts between in-house and outsourced teams. This may be due to cultural differences, gaps in communication, and negative perceptions about the outsourced company. Also, keep your internal team in the loop at all times while communicating with the client and other teams.
What are the two classifications of outsourcing? ›Knowledge process outsourcing (KPO). This deals with outsourcing knowledge development for product improvements, such as research and data analysis. Recruitment process outsourcing (RPO).
What are the advantages and disadvantages of outsourcing? ›- Advantages Of Outsourcing. ...
- You Don't Have To Hire More Employees. ...
- Access To A Larger Talent Pool. ...
- Lower Labor Cost. ...
- Cons Of Outsourcing. ...
- Lack Of Control. ...
- Communication Issues. ...
- Problems With Quality.
More formally, risks associated with outsourcing typically fall into four general categories: loss of control, loss of innovation, loss of organizational trust, and higher-than-expected transaction costs.
What is the impact of outsourcing on an economy? ›How Job Outsourcing Affects the Economy. Job outsourcing helps U.S. companies be more competitive in the global marketplace. It allows them to sell to foreign markets with overseas branches. They keep labor costs low by hiring in emerging markets with lower standards of living.
How outsourcing can grow your business? ›Outsourcing allows you to focus on growing your business.
You run the risk of spending too much time and effort on operations, leaving little to none for strategy and growth-pursuing. BPO companies lend a hand to brands in taking care of non-core business functions, such as printing, billing, and labelling.
Outsourcing can be the key to growth and scalability for small to enterprise businesses. BPO centers can help business leaders minimize costs and maximize productivity by adopting a partnership attitude. Outsourcing also frees up your leaders time to focus their efforts on what they do best: the core of the business.
Do you think outsourcing will continue to play a role? ›The answer is a definite yes. Outsourcing will continue to survive in the future, as it provides companies the access to specialized skills and save on time and effort, which can be channeled into the other core business ventures.
What do you think would be the future of business process outsourcing in the Philippines? ›“No doubt offshore BPO to the Philippines will continue, but the type of processes and the sheer volume of them will transform. To remain competitive, the country will need to reimagine its role in the global marketplace and continue to upskill its BPO workforce,” Ellspermann explains.
What is strategic outsourcing? ›
What Is Strategic Outsourcing? Strategic outsourced services represent a set of operations that are delegated by a company for management to a third-party service provider. Most commonly, this process is associated with small companies that do not have enough resources to manage all tasks themselves.
Why are countries outsourcing to India? ›Budget-friendly services and flexible pricing options
The development cost in India is 30 to 35 per cent lower compared to the US and Europe. You will also be assured of acquiring quality service as the country is among the leading outsourcing destinations in terms of the IT industry.
Offshore Outsourcing is when an organization recruits a third party supplier to conduct operations from an outside country. Offshore outsourcing companies provide service from low-cost regions around the globe to reduce costs and tap into seasoned CX experts.
Why should businesses outsource supply chain? ›Outsourcing supply chain functions increases value to your customers by allowing your company to become more efficient and nimble in areas like order picking and packing. This allows you to deliver products and services faster and with more accuracy, which cuts down on returns and lost sales from frustrated customers.
What are drivers of supply chain management? ›Five supply chain drivers, Production, Inventory, Location, Transportation, and Information, influence the performance of the supply chain. Companies can develop and manage these drivers to emphasize the ideal balance between responsiveness and efficiency, depending on your business and financial requirements.
Why is it necessary to identify and select the right vendors in BPO? ›Choosing the right call center vendor is very important because an enterprise cannot compromise their branding and quality standards. Call centers are at the heart of many businesses. Most of the time, it is where the interaction of customers and a company happens first.
What are the recent trends in outsourcing? ›The outsourcing industry has shown an increased demand for cloud-based technology. Predictions show this trend will carry on this 2022, as the BPO sector continues to derive advantages from technology use. Outsourcing companies that use cloud-based applications are at an advantage.
What is the most commonly outsourced function? ›Accounting is one of the most common areas where small businesses choose to outsource. If you're not a financial expert, then it can take a lot of time and skills to learn all the processes and compliance standards your company must meet.
What are examples of outsourcing? ›Some common outsourcing activities include: human resource management, facilities management, supply chain management, accounting, customer support and service, marketing, computer aided design, research, design, content writing, engineering, diagnostic services, and legal documentation.”
Why is there a growing trend in outsourcing? ›The popularity of outsourcing is growing since it provides access to wider global markets. Smaller companies, thanks to delegating tasks, have a possibility to scale their business faster.
What are the benefits of outsourcing? ›
- lower costs (due to economies of scale or lower labor rates)
- increased efficiency.
- variable capacity.
- increased focus on strategy/core competencies.
- access to skills or resources.
- increased flexibility to meet changing business and commercial conditions.
- accelerated time to market.
What percentage of U.S. companies outsource? 66% of U.S. companies with 50 or more employees outsource, while 29% of U.S. companies with fewer than 50 employees outsource. Furthermore, 68% of large U.S. consumer products involve outsourcing in at least one department of their organization.
Where do companies outsource to the most? ›The US has the most percentage of outsourced jobs in the world, with almost 68% of companies delegating their services. The UK, meanwhile, has around 48% of companies offshoring business functions with talent shortage as the main factor.
How big is the outsourcing industry? ›...
| Report Attribute | Details |
|---|---|
| Market size value in 2022 | USD 261.9 billion |
| Revenue forecast in 2030 | USD 525.2 billion |
| Growth Rate | CAGR of 9.1% from 2022 to 2030 |
India controls 44 per cent of global outsourcing.
What is meant by IT outsourcing? ›IT outsourcing is the use of external service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes.
What does it mean when your job is outsourced? ›Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company's own employees and staff.
What is another word for outsourcing? ›...
What is another word for outsourcing?
| sourcing | deploying |
|---|---|
| redistributing | subcontracting |
| utilisingUK | utilizingUS |
- Professional outsourcing.
- IT outsourcing.
- Manufacturing outsourcing.
- Project outsourcing.
- Process outsourcing.
- Operational outsourcing.
- Cost Savings. “Cost savings is the main advantage that outsourcing brings in. ...
- Scale Quickly. ...
- Network Security. ...
- Focus on Growth. ...
- Remain Competitive. ...
- Grow Business. ...
- Delegate Tangential Processes.
Will outsourcing importance grow in the future? ›
Prediction #5: Outsourcing Continues Its Expansion Across The Globe. With a red hot job market, remote work boom, and technological advancements, the outsourcing industry is due for expansion in 2022.
Is outsourcing good or bad? ›Outsourcing has economic effects, good and bad. It has the greatest impact on jobs and prices. In general, it leads to less employment and lower prices in the business's home country, but not always.