Since owning a business, I have been looking for ways to better run it and maximize resource usage. One strategy that has always proven effective is outsourcing. In recent years, outsourcing has changed and evolved into an explosion of means through which companies boost efficiency, reduce costs, and gain competitive advantage. If you’re like me, then monitoring trends and statistics will help shape future outsourcing strategies better. Here, I will share key outsourcing stats from 2024 to 2027, which will revolutionize your business strategy.
The Remarkable Growth of the Outsourcing Industry
One of the most important trends that has cropped up lately is the industry’s size. There will be $731 billion spent on outsourcing globally by 2024, an increase of 22% more than the money spent in the past. Up to now, most of this spending growth has been on IT outsourcing and BPO. These two sub-industries alone constituted most of this spending. The IT side was anticipated to grow to $519 billion, while the BPO side would grow to $212 billion by 2023.
Outsourcing remains the heart of operational strategy for US businesses. According to recent statistics on outsourcing, 92% of G2000 companies (the world’s largest 2000 public companies) indicated they used IT outsourcing services. This denotes that outsourcing is no longer a preserve of small businesses but forms an integral part of extensive corporate strategies. The ever-growing need for cloud computing, cybersecurity, and application development has fueled such demand.
- 92% of companies from G2000 use IT outsourcing
- 37% of small businesses outsource at least one business process
- Companies that outsource HR save 27.2% on average
Outsourcing Beyond IT: Business Process Outsourcing is Booming
Even as IT outsourcing has hogged the headlines, BPO has been quietly going great guns. Spending on BPO in 2023 is expected to reach above $212 billion and grow annually by more than 9 percent through 2030. Most of the growth would come from financial services, telecommunication, and healthcare industries.
It is now common in the United States for businesses to outsource functions such as payroll, marketing, customer service, and logistics to a BPO. This will enable organizations to focus on their core competencies while ensuring such vital processes receive quality attention from experts. Today, companies are coming to realize that it is no longer only about cost reduction but also about improving service quality and tapping into global outsourcing services talent.
Among the trends being witnessed, no shows slowing down outsourcing; 65% of companies say the “enabling of a focus on core functions is the main benefit.” This is in line with app development outsourcing, witnessed in 60% of the organizations today and thus reap expertise.
Critical Outsourcing Trends to Watch from 2024 till 2027
Here are some key outsourcing trends that you should watch closely as we progress towards 2024 and beyond:
- Increased Demand for Cybersecurity Services: As cyber threats escalate, 83% of IT leaders are looking to outsource their security efforts. Such trends should only increase further as businesses realize that in-house teams have much less capability to combat increasingly sophisticated attacks.
- Cloud-First Strategies: 90% of companies use cloud computing as a critical enabler in their outsourcing strategy. Nowadays, cloud services are becoming essential to streamline operations, and outsourcing is moving toward a cloud-first model without a massive investment in infrastructure.
- Focus on Cost Savings: The number one reason driving companies to outsource continues to be cost savings. Companies outsourcing human resources functions like recruiting, compliance, and payroll activities cut costs by an average of 27.2%. With growing inflation coupled with increased operational costs in the United States, the ostensibly favorite option by companies remains to continue outsourcing to save their bottom line.
- Freelancing and Gig Work as an Outsourcing Strategy: By 2024, over 50 million Americans will freelance and contribute $1.3 trillion to the U.S. economy. Businesses are increasingly turning to freelancers for creative work, such as content creation, graphic design, and marketing, in an effort to make them more nimble and lean.
Some Outsourcing Statistics to Make You Squirm
As the statistics of outsourcing for 2024 and more are sifted through, few jump out as eye-catching and thought-provoking-and you might be surprised by them:
- Companies that outsource in the Philippines can save up to 70% on labor costs compared to the United States.
- By 2025, 60% of finance and accounting outsourcing contracts will not be renewed due to outdated pricing models; even outsourcing contracts need modernization.
- As the world of app development states, an impressive 72% of organizations in the financial services industry outsource this, while in healthcare, it’s only 31%. Not much needs to be said about how some industries lean towards outsourcing more than others.
These statistics can reveal that outsourcing is not only task transfer but also tendencies to follow trends and continuous fine-tuning of one’s approach towards business services outsourced.
The Future of Outsourcing: What Does It Mean for Your Business?
As the outsourcing trend continues to surge, you must consider the effects of these trends in your business. Small-scale to large corporations, with all potential saving benefits and additional efficiency, to get global access to talent – it’s just too big an opportunity to overlook.
One of the questions most business owners, including myself, pose is: How balanced is the right balance between in-house operations and outsourced services? To cut to the chase: it’s about knowing and being nimble. Keeping an eye on outsourcing statistics and trends will help guide you toward strategic decisions that will pay off for your bottom line in the long run.
In the next years, companies that avoid outsourcing might find themselves trailing in competition in the market while their competitors will utilize outsourced services to help them innovate and grow.
Frequently Asked Questions (FAQs)
What is the U.S. most outsourced business process?
In the U.S, IT services remain the most outsourced business process followed by human resources and customer service functions.
Why would a firm outsource?
Firms outsource mainly to reduce costs, increase efficiency, and make available special skillsets that the organization lacks in-house.
Is outsourcing only apt for large businesses?
No, outsourcing is as relevant to small companies, especially in the case of small companies looking to streamline processes and focus on core business while still gaining access to expertise.
Key Takeaways
As we close the deep dive into these spectacular statistics on outsourcing between 2024 and 2027, it is evident that the outsourcing landscape is changing how businesses operate, grow, and compete. Outlined are these insights into how companies use outsourcing to cut costs, gain access to niche skills, and achieve better operational efficiencies. Here are three takeaways:
- Take advantage of cost savings: Global outsourcing services remain the best way to cut costs since they help save about 70% of labor costs when different operations are outsourced to countries such as the Philippines.
- Outsource IT Services and Get a Step Ahead of the Game: Since 92% of companies outsource their IT services, it is simply a competitive imperative to outsource and enjoy better efficiency, cybersecurity, and app development.
- Core Competencies: As 65% of companies realize now, outsourcing enables business organizations to focus back on the core and ensure that specialized tasks are executed and managed by professionals. In contrast, the internal teams focus on growth and innovation.
We have been discussing the outlay of global outsourcing services that can impact your business strategy, like cost-cutting to staying agile in an ever-changing market. We will leave room for comment drops of opinion and experience to build on this conversation. How have global outsourcing services benefited your company? Let’s get connected and learn from each other.
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