Outsourcing Statistics: The Situation Amid COVID-19

Outsourcing Statistics: The Situation Amid COVID-19

Nowadays, an increasing number of international businesses are looking to outsource some of their work to a third party. This way, companies can save time and money. So, it’s not surprising that this business practice has become a lifestyle for many small and large firms out there.

While outsourcing is helpful to many organizations, some people are still skeptical or overly optimistic about it. For this reason, you should check out below some of the most intriguing outsourcing facts and stats to understand this industry better.

Top Outsourcing Statistics and Facts: Editor’s Choice

  • The US outsources a staggering 300,000 jobs annually.
  • Large firms outsource 66% more than small businesses.
  • 93% of companies are considering or have already adopted cloud services to improve outsourcing.
  • A whopping 78% of organizations feel optimistic about their outsourcing partners.
  • The US’ overseas affiliates employ 14.4 million workers.
  • In 2020, 30% of UK companies planned to outsource more.
  • By 2026, the IT market is estimated to reach $425.19 billion.
  • Cost reduction is the primary reason for outsourcing.

General Outsourcing Statistics in 2021: What’s the Current Situation?


1. The US outsources a staggering 300,000 jobs annually.

This figure will undoubtedly increase in the future, as many US companies are jumping on the outsourcing bandwagon. On the downside, sending jobs overseas caused many hard-working Americans to become unemployed.

Because of the jobs lost to outsourcing, statistics prove that Americans have mixed feelings about this industry. Thanks to the Great Recession impact and the current pandemic, these negative sentiments are stronger than ever.

2. During the pandemic, nearly 59% of respondents saw no change in outsourcing their marketing activities.

In May 2020, 274 professionals were surveyed about their outsourcing marketing activities during the COVID-19.

Outsourcing statistics in 2020 revealed that more than half of the respondents did not see any change. At the same time, roughly 22% of them saw a decrease, and about 19% increased their outsourcing marketing.

3. Large firms outsource 66% more than small businesses.

It shouldn’t come as a surprise that companies with over 50 employees are most likely to outsource. In comparison, outsourcing trends show that only 29% of outsourcers are small businesses. 

Many small business owners prefer to keep their services in-house and do things themselves instead of spending money on a third party.

4. 80% of small businesses intend to outsource in 2021.

As demonstrated by US outsourcing statistics, in 2021, eight out of ten small companies plan to outsource. They claim this would help them save time and money, improve operational efficiency, and work with experts in the field.

Additionally, small businesses expect to experience growth by outsourcing their functions and resources.

5. 93% of companies are considering or have already adopted cloud services to improve outsourcing.

Trends in outsourcing prove that almost all companies choose to improve their outsourcing by introducing cloud technology, and for many reasons. For example, 64% of them use cloud services for IT innovation, and 56% want to increase efficiency.

As competition is getting fiercer, about 63% of organizations want to make sure their products reach the market better.

6. According to the latest outsourcing statistics, a whopping 78% of organizations feel optimistic about their outsourcing partners.

Maintaining positive relationships with the parties involved is key to success. Thankfully, a great majority of companies feel positive about their outsourcing relations.

What’s more, around 45% of business owners feel satisfied with their partners, and an additional 2% feel extremely satisfied.

What Is the Number of Jobs Outsourced in the US and Around the World?


7. US overseas affiliates employ 14.4 million workers.

In 2018, the US outsourced a staggering 14.4 million employees in different sectors, such as manufacturing, IT, call center, etc. Yet, this figure has considerably decreased with the impact of the pandemic.

As of September 2020, the statistics on outsourcing from the Bureau of Labor Statistics reported that the total unemployment rate was 7.6%, which equaled around 12.6 million.

8. India is the leading country for outsourcing.

It’s not surprising that many European and American firms outsource to low-cost regions, but why do 80% of these companies outsource to India? This country is the most preferred destination for outsourcing because of its cheap and highly skilled workforce. 

Furthermore, India’s language barrier is non-existent as it’s the second-largest English-speaking country in the world.

However, countries like China, the Philippines, Ireland, and Mexico are also cost-saving locations for outsourcing.

9. In 2025, India’s IT outsourcing will see a CAGR growth of 7.25%.

Regarding outsourcing to India, statistics suggest that the IT industry is predominant in the country. This sector is expected to reach INR 8,830 billion by 2025. The figure has seen considerable growth from the INR 5,649.47 billion registered in 2019.

With that said, the number of software developers in India might even exceed the US numbers.

10. Outsourcing statistics in Australia demonstrate that businesses hire about 244,000 people in outsourced jobs.

Just like in other countries, Australia adopts outsourcing to reduce operating costs and expand the workforce. 

The Aussie Business Process Outsourcing (BPO) currently counts more than 35,500 businesses, with 244,501 employees.

Outsourcing statistics in Australia for 2021 reported that the BPO’s revenue would see a slower increase in the next five years due to the devastating impact caused by the COVID-19.

11. In 2020, 30% of UK companies planned to outsource more.

IT, financing services, and manufacturing businesses are sectors that planned the most outsourcing.

According to outsourcing statistics in the UK, about 30% of clients outsourced 2% more than in 2019. On the other hand, about 15% of companies outsourced less, and about 19% are hesitant about outsourcing their services.

The number of hesitant business owners has grown from 13% registered in 2019 due to the pandemic outbreak.

12. Ukraine is among the top IT outsourced countries in Eastern Europe.

Over the past five years, the Ukrainian IT market has more than doubled, reaching a whopping $5.7 billion in 2020. This astonishing figure is not expected to slow down any time soon.

Recently, Global Outsourcing has filed a list of Ukrainian IT outsourcing companies, determining Ukraine is among the best countries for outsourcing in East Europe. 

On top of that, Gartner and Outsourcing Journal awarded the country as the best destination for software development outsourcing.

13. NAFTA has caused the US to lose over half a million jobs to Mexico.

When you think about the history of outsourcing in America, the North American Free Trade Agreement (NAFTA) is a big part of it. Since 1994, NAFTA was expected to make cross-border trade more beneficial for North American countries. However, about 682,900 Americans lost their jobs to Mexico.

The situation hasn’t been great for South American countries either. Agriculture underwent severe unemployment because of the influx of US workers. Outsourcing trends claim that the financial recession in 2008 is the reason why this project failed.

Outsourcing Statistics by Industry


14. By the end of 2019, the global market size of the outsourcing industry reached $92.5 billion.

Over the last few years, the global outsourcing revenue has been unstable. For example, in 2016, the international outsourcing market touched the lowest point of this decade at around $76.9 billion.

The largest outsourcing income share comes from North and South America. Europe, the Middle East, and Africa come right after, still taking up a big slice of the market.

15. By 2026, the IT market is estimated to reach $425.19 billion.

IT outsourcing statistics forecast that the market will grow considerably in the next five years, at a CAGR of 4.5%. Only last year, the global IT outsourcing industry was worth nearly $318.5 billion. 

Understandably, the current digital transformation caused companies to rely on the success of innovative operations.

16. The most recent HR outsourcing statistics imply that 45% of outsourced services belong to HR consulting.

Human resources consulting is the most popular service in the industry, accounting for almost 50% of the overall HR outsourced services.

Benefits administration ranks second with 36%, followed by time-tracking with 24%, and insurance services with 19%. Besides, outsourcing facts revealed that a mere 10% belong to performance management.

17. US call center employees cost seven times more than Indian workers.

Compared to countries with a cheaper workforce, the US pays between $22 and $35 per hour for call center operators. 

That’s why American businesses decide to outsource primarily to India. Outsourcing call center statistics prove that India would cost a company between $5 and $9 per hour, up to seven times less than the US.

Many American companies choose the Philippines as their second option, where the hourly pay ranges from $8 to $14.

18. The top 10 US businesses outsource over 200,000 jobs.

Firstly, IBM outsourcing statistics claim that this company alone has outsourced around 63,700 workers. 

Other companies such as EDS, Dell, Cognizant, Siemens, General Electric, Convergys, Accenture, Computer Sciences Corp, and Intel also contributed significantly to the outsourcing industry’s growth.

Although it might be a danger for the economy, outsourcing won’t cease to exist any time soon.

Why Do US Companies Outsource Jobs?


19. Cost reduction is the primary reason for outsourcing.

The ongoing coronavirus outbreak made it challenging for many companies to stay competitive in the market. So, cutting costs has become the top priority for over 70% of American business owners.

Unlike these last couple of years, outsourcing statistics by year demonstrated that the vast majority of companies perceived outsourcing as a means to boost their internal business processes.

20. 57% of firms outsourced work to save time and focus on core business.

The second most common reason for outsourcing jobs is reducing monotonous and time-consuming duties. In this case, business owners tend to employ remote workers.

Some benefits of outsourcing these tedious jobs to gig workers involve reducing the company’s costs and enhancing the workforce’s efficiency.

21. 47% of companies outsource to solve capacity problems.

Many Americans solve their temporary problems by outsourcing their resources, and reaching full capacity is one of them. Even though your company is ready for fast growth, you will eventually encounter this issue.

So, US outsourcing statistics prove that almost half of American businesses turn to outsourcing to solve capacity management problems.

22. Thanks to outsourcing, the average business owner saves up to 60% on labor costs.

Many costs related to working from the office can be avoided by outsourcing work. 

Outsourcing statistics show that employers can save a considerable amount of money by providing their expectations to their BPO company and pay a fair hourly fee.

Outsourcing Statistics: The Takeaway

Whether we are talking about small businesses or large corporations, the purpose of outsourcing is the same—reducing costs, working on core functions, solving capacity issues, enhancing service quality, and so much more.

The above-listed outsourcing statistics prove that emerging technologies like cloud and automation are gradually changing this market.

Contrary to popular belief, outsourcing is an industry in constant growth and here to stay. However, companies judge it is better to keep core services in-house. Still, software development and maintenance are most likely to be outsourced.

Frequently Asked Questions

How much do companies save by outsourcing?


If your business is going wrong, cutting labor costs is the first course of action. In this sense, outsourcing helps you reduce costs by hiring in low-income regions or remote workers for a much cheaper rate.

For example, the average wage in the US is about $11.22 per hour. The same salaries in India and the Philippines account for $2.42 and $5.14 per hour, respectively. You can save a ton of money on wages alone by outsourcing your employment.

What percentage of US companies outsource?


US companies that choose to outsource their services account for a whopping 68%—here’s why. Outsourcing to low-cost countries is a good way for businesses to cut costs, improve efficiency, extend the company globally, and hire new talents.

Both small and medium businesses and large organizations are planning to outsource their services in the next few years.

Is outsourcing increasing or decreasing?


Despite the influence of the COVID-19, a large slice of marketers (59%) did not see any change in their outsourcing functions. Surprisingly, only 19% of them experienced an increase in outsourcing.

Especially the global IT industry has seen a positive outcome out of this financial crisis. The employment of remote workers lets companies reduce their costs, diminish time-consuming tasks, and employ new talents.

The global IT market is projected to grow by a staggering $98 billion from 2020 to 2024, expanding at a CAGR of 5%.

Is outsourcing increasing or decreasing?


Despite the influence of the COVID-19, a large slice of marketers (59%) did not see any change in their outsourcing functions. Surprisingly, only 19% of them experienced an increase in outsourcing.

Especially the global IT industry has seen a positive outcome out of this financial crisis. The employment of remote workers lets companies reduce their costs, diminish time-consuming tasks, and employ new talents.

The global IT market is projected to grow by a staggering $98 billion from 2020 to 2024, expanding at a CAGR of 5%.

Which industries outsource the most?


The Clutch Small Business BPO Survey has reported that the most outsourced industries are accounting and IT services, both constituting an astonishing 37%. Digital marketing comes right after with 34%, development with 28%, human resources, and customer support with 24%.

Although all the sectors mentioned above have seen significant financial growth, IT is considered the top contributor.

Which country does the most outsourcing?


Outsourcing statistics tell us that the US is the country that does the most outsourcing, contributing 41.5% of the total deal value. Nevertheless, Asia Pacific, Europe, the Middle East, and Asia are not that far behind.

On the other hand, low-cost countries such as India, China, Malaysia, Indonesia, Vietnam, and the Philippines are widely considered the best destinations for outsourcing.

Sources

Classic InformaticsClassic Informatics, ClutchDeloitte, Deloitte, Deloitte, EntrepreneurExtensis HRIDAPIBIS WorldLove to KnowMarketplacePA ConsultingPR NewswireOutsource Accelerator, Research and MarketsStatistaStatistaStatistaThe Balance, The Balance, The Balance