Outsourcing has become a popular business strategy for companies looking to reduce costs, increase efficiency, and access specialized skills. With the growth of technology and the global marketplace, outsourcing has become a viable option for businesses of all sizes.
The outsourcing statistics below give you a clear overview of how outsourcing influences the job market, what its impact is on the economies that outsource, and are outsourced to, and more.
Top Outsourcing Statistics to Know in 2024
77% of European Union companies outsource within EU borders.
East Africa is a growing IT market.
Security services make up 55% of all work outsourced by US IT companies.
Outsourcing services made up 9% of the entire 2021 GDP of the Philippines.
Customer service makes up 30% of the global outsourcing market.
The global outsourcing market was valued at $261.9 billion in 2021.
50% of US IT outsourcing contracts don't last longer than 5 years.
Companies can save up to 70% on staffing costs through outsourcing.
Anything between 700,000 and 14.6 million US jobs has been lost to outsourcing.
66% of companies with more than 50 employees outsource to a greater or lesser degree.
General Outsourcing Facts and Stats
In 2022, the global outsourcing market was valued at $261.9 billion.
Furthermore, if outsourcing trends continue the way they have, the market will reach a value of roughly $486 billion by 2030, with a CAGR of 9.3%.
One of the main factors that contribute to its growth is the increasing popularity of cloud computing for outsourcing technologies.
(Grand View Research)
The main drivers that led 80% of businesses to plan to outsource in 2021 were saving time, working with experts, and growing their business.
In fact, 66% of small businesses already outsource their work in order to maximize the potential of their companies and minimize costs.
(PR NewsWire)
Customer service took on 30% of the global outsourcing market share…
It may come as no surprise that outsourcing statistics show customer service as the primary segment for outsourcing. However, finance and accounting are also expected to grow significantly.
The human resources segment will also grow, with a focus on payment processing, administration, and employee benefit services.
(Grand View Research)
…but IT and Telecommunications have the largest revenue share, at 34%.
The most likely cause is the increasing global demand for connectivity. Outsourced IT services include addressing safety issues, as well as allowing the main company to focus on innovation and development. Telecom companies usually focus on billing operations, as well as call-center outsourcing.
(Grand View Research)
Between 20% to 25% of outsourcing contracts between US IT companies and other countries do not last more than 2 years.
Outsourcing failure statistics also show that 50% don't last more than 5 years. The core reasons are poor communication and dishonest collaboration between companies. Another reason is that companies simply do not need to outsource to a specific company for more than 5 years.
(Fulcrum)
North America holds 35% of all revenue from this market.
Outsourcing stats also show that it will continue to grow and strengthen its dominance. The core factor behind its majority share is the presence of major tech giants within the region.
However, the Asia Pacific region is expected to have the largest and fastest growth level and the highest CAGR for the 2023-2030 period.
(Grand View Research)
One estimate cites 700,000 American jobs lost to outsourcing between 2017 and 2019.
The US Labor Department does gather data and information on how many Americans lost their jobs to offshoring. However, the jobs lost to outsourcing statistics are imprecise because the program that tracks it is voluntary and is based on the Trade Adjustment Assistance program.
The program itself claims the number of lost jobs, listed as 311,427 between 2017 and 2019, is a severe underestimate.
(Public Citizen)
On average, 13.6% of the total IT budget of many IT organizations went to outsourcing in 2020.
This represents a substantial increase, from 12.7% in 2019, in (at least for the IT industry) healthy economic conditions. The most likely cause is the general comfort companies now feel with outsourcing, being happy with the level of skill and knowledge offered on the market.
However, it needs to be mentioned that these software development outsourcing trends are not as cut and dry as they seem. The actual median average is 6.5%, with larger companies carrying the brunt of the share.
(Computer Economics)
55% of all the work IT companies outsource revolves around security.
And these companies claim they will continue to outsource this segment. The core reasoning behind these two outsourcing trends is that companies want to improve their “defenses” against privacy breaches.
Note that they are not replacing their employed experts but are rather gathering more people to help at an admittedly lower cost.
(Computer Economics)
Application development is the fastest-growing segment being outsourced by IT companies.
App development is not only at the top of the most commonly outsourced services, with 60% outsourcing at least some part of the process, but it is also growing at a rapid pace. In fact, it grew by a substantial 4 percentage points between 2019 and 2020.
Besides bolstering their talent pool, outsourcing allows companies to become more flexible, as the need for app developers varies from project to project.
(Computer Economics)
Cost reduction and agility are critical factors behind outsourcing.
A 2020 study by Deloitte, in fact, shows that cost reduction, while being a secondary factor for years, has become the top reason for outsourcing.
However, the Pandemic has shown that agility and flexibility are critical, with companies needing to shift resources, both financial and staff, at a moment's notice.
(Deloitte)
Computer programming has been a popular outsourcing job since 2008, at least.
Even almost a decade and a half ago, the most outsourced jobs centered around IT, with computer programming and data entry being at the top.
(Population Reference Bureau)
Outsourcing is not without risk.
One risk is the loss of confidentiality and sensitive data. The other is an inevitable loss of control. No matter how well-developed your systems and communication tools are, there will still be an element of trust that can't be ignored.
(Corporate Finance)
Only 19.4% of US marketing companies claimed the Pandemic increased their outsourcing activities.
However, 21.8% actually reported a decrease, with the rest claiming nothing changed. One reason behind this trend is the fact that the Pandemic has not substantially impacted the need for outsourcing.
(Statista)
Outsourcing Market Trends
Cloud Based solutions might be the main outsourcing trend for 2023.
HR outsourcing trends for outsourcing include keeping vital information, like employee data and payrolls, in a secure digital location. Due to the decentralized nature of outsourcing, having all of this information within cloud-based storage that is easy to access from anywhere in the world is crucial, especially as a company’s outsourced staff grows.
(EmphasisHR)
East Africa is one of the fastest-growing markets for IT.
Technology adoption and development are accelerating in East Africa. Since 2015 tech giants have paid several visits to the region, with Jack Dorsey, who relocated to Africa for a few months in the early months of the Pandemic, claiming that there are “huge opportunities, especially for young people ''.
The region is also marked by a continually improving infrastructure and a strong investment presence from international companies.
(Code of Africa)
Google, Facebook, and Nike are among the top outsourcing companies in the US.
These well-known companies are at the top when it comes to outsourcing, especially to the Philippines. The UnitedHealth Group, a US healthcare company, as well as Wells Fargo and Hewlett-Packard, are among the top as well.
(OutsourceAccelarator)
Outsourcing and the World
77% of EU companies outsource to other EU member states.
One core motivation is the amount of EU subsidies and support given to member states to build the European Single Market. This market is a cornerstone of the European Union, with the goal of advancing the movement of goods, services, and capital within EU borders.
Roughly 18% of EU countries outsource to other non-EU countries, and the same percentage is outsourced to India. Roughly 13% outsource to the UK, and 11% to North America.
Of course, these percentages do overlap, as some countries might decide to outsource to multiple regions at one time.
(Eurostat)
Poland is the best country for IT and software outsourcing.
One of the core reasons behind Poland’s success is its adherence to strict GDPR and EU privacy and data security regulations.
However, other top outsourcing countries include China for manufacturing and Mexico for customer support. The Philippines also needs to be mentioned since the country is great for offshoring your marketing and call center needs.
(Zenefits)
Only 25% of British businesses have never outsourced any part of their jobs to a third party.
However, of those that outsource, 34% outsource IT support, 28% outsource payroll activities, and 21% do so for software development.
48% claim they outsource due to lacking qualified staff, while 30% believe they will get better results. For those that outsource IT, 30% claim they do so because it's cheaper in general, with 29% specifically mentioning lower staff costs.
(YouGov)
US Finance and Accounting organizations will only renew 40% of their outsourcing contracts by 2025.
Among the surprising outsourcing trends predicted by Gartner is the fact that many F&A companies will not continue with their current outsourcing contracts.
Their main point of contention is that these contracts have outdated pricing models that do not lead to greater digitization. Furthermore, these models do not lead to adequate process improvements.
(Gartner)
The Chinese service outsourcing industry was worth $175 billion in 2020.
There was a substantial 10% year-to-year growth for this market between 2016 and 2020, where it was worth “only” 106.46 billion in 2016.
(Statista)
In 2021 outsourcing services were responsible for 9% of the entire GDP of the Philippines.
Valued at $29 billion at the time, outsourcing statistics show that most of these activities focused on call centers and marketing. Furthermore, outsourcing did wonders for the country’s job market, where 120,000 new call center jobs were created in the country in 2021.
One key factor that led to the growth and development of this industry within the Philippines is the initial outsourcing of contact centers to the country from the US and Australia.
(Match Board)
To Sum Up
The above data and statistics on outsourcing should give you a strong idea of what the future has in store for this very specific market segment.
Just remember, whether you're outsourcing for the first time or are an experienced outsourcing company, understanding the latest trends and statistics is essential for success in today's rapidly changing business landscape.
Outsourcing FAQ
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