Outsourcing represents a cost-effective and valuable way for business leaders to access more of the technology, skills, and expertise they need quickly.
In recent years, demand for outsourcing has increased, particularly as companies have struggled to keep their teams running smoothly in a landscape influenced by a global pandemic.
Currently, the business process outsourcing market alone is set to increase in value by around 8.5% between 2021 and 2028. Experts like PWC even believe outsourcing is finally “coming of age”, in a world where companies need more flexibility in their access to talent.
Today’s outsourcing statistics will offer a behind-the-scenes look at how the outsourcing market is changing for 2023 and beyond.
Key Outsourcing Statistics – Editor’s choice
- 45% of companies have planned to increase their outsourcing since the pandemic, often focusing on finding skillsets they can’t access in-house.
- The cloud allows around 90% of companies to embrace more outsourcing opportunities by enabling teams to reach a wider range of distributed professionals.
- By the end of 2023, IT outsourcing should exceed a spend of $1.3 trillion as companies increase their search for digital transformation experts.
- The number one reason for outsourcing for 70% of companies is cost reduction, as outsourcing lowers the costs associated with hiring in-house staff.
- Around 24% of small companies say they outsource to increase efficiency levels. Many small businesses also use outsourcing to access specialist skills.
- Business process outsourcing is set to hit a value of $620 billion by 2032, as companies continue to work collaboratively with contractors.
Outsourcing Statistics: General Market Statistics
1. 45% of global corporations plan to increase outsourcing due to the pandemic
According to a report from NTT Services, the pandemic showed countless companies a rising need to optimize their workplace environment, bringing in new skills and talent. Around 48% of companies in the NTT study said they knew they needed to update their environments, and 45% of global corporations said they’re planning to outsource more work due to the pandemic.
NTT’s study indicates a significant amount of focus from companies investing in outsourcing today will be placed on searching for professionals with technical skills.
2. Cloud is a primary enabler in outsourcing for 90% of companies
The Deloitte survey into outsourcing found around 90% of companies said they felt cloud was one of the primary enablers in their outsourcing journey – a similar statistic to findings shared in the previous 2019 journey.
However, a surprisingly large number of respondents also said a “lack of maturity” for operating models and solutions in the cloud has been a major barrier to realizing the full benefits of this new environment. Deloitte believes the crisis of Covid-19 will push more cloud adoption, and further enhance the opportunities of outsourcing for business leaders.
3. 62% of companies are looking to renegotiate outsourcing contracts
As the marketplace continues to evolve at an incredible rate, and companies struggle with the budgetary issues caused by the pandemic, around 62% of respondents in a study by BCG said they plan on renegotiating their outsourcing contracts.
According to the report, the biggest conversations for 59% of companies will be around the terms and conditions of the contracts. 56% of companies want to look at pricing structure, while 48% say they’re interested in redefining the delivery model.
4. Around 300,000 jobs are outsourced in the US each year
A report by Aptude on the global outsourcing market indicates businesses are outsourcing around 68% of their workforce requirements, with around 300,00 positions currently moving overseas, accounting for approximately $85.6 billion in the global market.
Atptude also notes the number one reasons organizations look to outsource is to reduce the expenses or running a complex business environment. However, companies also look to outsourcing to ensure their businesses can run more efficiently in an environment demanding 27/4 service.
5. By the end of 2023, IT outsourcing spend will exceed $1.3 trillion
According to Statista reports, the IT services outsourcing market is expected to be a particularly fast-growing environment. By 2022, the market was worth around $1.2 trillion worldwide.
The rise of demand for SaaS and cloud solutions in the modern workplace is likely to drive this demand even further. By 2023, the marketplace is expected to reach a value of around $1.392 trillion for outsourcing IT worldwide.
6. 54% of companies say they’ve seen no change to service quality with their outsourcing initiatives
According to a report from PA Consulting, around 96% of all cloud-based outsourcing service relationships are rated positively by today’s teams. Even dealing with the stresses of the pandemic, companies have been able to maintain their focus on high-quality service.
Around 54% of companies said there had been no change to the quality of the service they received, and a third of respondents in the PA Consulting said service quality has improved. Account management has been particularly positive, with an average score of 78% among customers.
Outsourcing Statistics: Why and What do Companies Outsource?
7. The number one reason for outsourcing is cost reduction
The Deloitte Global Outsourcing Survey for 2020 notes the number one objective for any outsourcing project is to reduce costs. Outsourcing allows companies to minimize the expenses associated with bringing new staff members and talents onboard.
However, Deloitte also noticed a number of other common objectives associated with outsourcing, such as achieving a higher level of flexibility and agility in business. These concepts have grown increasingly crucial during recent years with the rise of the pandemic.
8. 24% of small businesses outsource to improve efficiency
Reports from Clutch find around one-third of small businesses (37%) currently outsource at least one business processes to reduce costs and improve available skillsets. Businesses in the survey most commonly outsourced technical tasks like IT services (37%), accounting (378%) and digital marketing (34%).
Around 52% of respondents in the survey said they were planning on increasing their outsourcing strategies. What’s more, 24% said they outsource now to improve efficiency, while 18% said they choose to outsource to access expert assistance.
9. 27% of companies implementing RPA report a 10-20% cost saving
Deloitte’s study into the state of outsourcing in the modern market indicates cost is a common concern for a majority of companies. By implementing one form of automation – Robotic Process Automation, or RPA – 27% of respondents in the study said they achieved 10-20% savings.
The majority of respondents (53%) however, said they achieved savings of less than 10%. Around 9% of respondents achieved savings between 20-40%, or between 40-60%, and only 2% said they achieved savings of over 60%.
10. 83% of IT leaders want to outsource security
Companies can outsource a wide range of tasks in today’s versatile world. According to an IT Trends report from Syntax, a cloud services provider, the biggest focus for a lot of companies is on outsourcing cybersecurity requirements.
Around 83% of companies with their own in-house security teams are now considering outsourcing some security efforts to managed service providers.
11. Two thirds of organizations plan on increasing or maintaining IT outsourcing in the next 2 years
(Whitelane Research and PA Consulting)
The 2021 UK IT sourcing study conducted by PA Consulting and Whitelane research found around 65% of all respondents plan on outsourcing either at the same rate, or more in the years ahead. Around a third of specialists said they’re increasing their outsourcing requirements in IT.
By industry, the chemicals and manufacturing sectors, and the financial services sector are planning to increase outsourcing efforts the most, scoring around 59% and 46% in predicted increases respectively. Alternatively, only 21% of participants from the public sector say they’re planning on increasing their level of outsourcing.
12. Only 25% of British companies have never outsourced
According to a study conducted by YouGov in 2019, only around 25% of British companies have never outsourced any aspect of their business. Around 70% of B2B decision-makers said they have given key tasks to third parties to accomplish their goals.
Around 34% of companies in the survey said they regularly outsource IT support, while 28% chose outsourcing for payroll. Around 24% outsourced printing and accounting, while 21% chose outsourcing for software development, and 14% for recruitment.
13. Outsource IT and business services hit record levels for 20231
According to ISG and Computer Weekly, organizations across Europe spent around $26.5 billion on business services and IT services in 2021, the highest annual spend ever recorded.
According to this study, cloud-based services are closing the gap on traditional outsourcing requirements, with a 233% increase in sales compared to the previous years. Additionally, as-a-service contracts increased in value by 41% in 2021.
14. By 2025, Gartner predicts 60% of all finance and accounting outsourcing contracts won’t be renewed
Gartner believes key issues facing finance leaders will prevent them from renewing their outsourcing contracts in the years ahead. According to the analytics company, around 60% of companies won’t renew their existing BPO contracts because of outdated pricing models.
Gartner believes the current pricing models in place for many outsourcing companies, which focus on the number of full-time equivalents needed to complete a task is becoming obsolete.
Outsourcing Statistics: Outsourcing Trends
15. 85% of logistics leaders expect to see an increase in outsourcing budgets
Gartner believes the number of companies outsourcing essential tasks in 2023 and beyond will a accelerate significantly. Around 85% of logistics leaders were already expecting their outsourcing budgets to increase for 2020.
A reason for the expected budget increase was that logistics outsourcing can help companies to grow. Around 70% of respondents said end-to-end supply chain and overall objectives had been exceeded or met with the assistance of logistics outsourcing companies.
16. Business Process Outsourcing will reach a value of $620 billion by 2032
According to a Bloomberg report looking at the value of various outsourcing solutions over the next decade, BPO (Business Process Outsourcing) is likely to see significant growth. The BPO market should reach a value of $620 billion by 2032.
The market for business process outsourcing already grew at a phenomenal rate in recent years, reaching $232.3 billion in value by 2021.
17. 32% of companies believe they’ll outsource less after the pandemic
According to Deloitte’s 2020 study of the UK post-pandemic marketplace, around 32% of companies believe there will be less outsourcing for business processes as a result of the pandemic. A major reason for this may be a concern about budgets, or lack of control over security and privacy standards.
Deloitte’s study conversely found around 22% of companies believe they will be outsourcing more often following the pandemic.
18. 48% of companies are outsourcing offshore
According to a study by YouGov in the United Kingdom, around 48% of companies are outsourcing offshore because of a lack of talent in the available marketplace.
In the UK, London is a particularly strong market for outsourcing, with only 17% of businesses in the capital never outsourcing any business function, compared to around 26% throughout the rest of the nation.
19. India is continuing to grow as the top country for outsourcing business
A review of multiple studies by Time Doctor, including the Tholons Top 50 Digital Nations List for 2021, found India is still the top outsourcing destination for companies around the world, due to high cost savings and a variety of available talent.
Following India, the Philippines is also a strong choice for affordable talent, followed by the Ukraine, Poland, Brazil, and Mexico.
The Ever-Growing Market for Outsourcing
Outsourcing offers a valuable way for businesses of all sizes to access the crucial talents they need in an ever-changing business environment. Outsourcing is becoming increasingly popular in the post-pandemic era, particularly as companies grow more comfortable with the idea of working with professionals in a flexible cloud-based environment.
Hopefully, the outsourcing statistics above have offered an insight into just how quickly the outsourcing landscape is growing, and how versatile it can be for modern business owners. There’s no doubt we’ll see increasing demand for all kinds of outsourcing, from business process outsourcing, to IT services in the years ahead.