As our latest outsourcing statistics will reveal, an increasing number of organizations worldwide are looking to outsource some of their essential and non-essential business functions to third-party businesses to streamline workflow and save on costs. Today outsourcing has become a way of life for many small businesses and large firms.
In this article, you will find out all there is to outsourcing, including the many benefits of outsourcing, the top countries in terms of outsourced jobs, the market value of this growing industry, the coronavirus impact, and much more.
But first, be sure to check this list of most intriguing facts on outsourcing:
Top 10 Outsourcing Statistics for 2022
- Around 300,000 jobs are outsourced by the US annually.
- The top reason for outsourcing (70%) is cost reduction.
- The total IT budget in 2020 grew from 12.7% in 2019 to 13.6%.
- 58.8% of US marketers saw no covid-related changes in the outsourcing marketing activities.
- Larger companies are 66% more likely to outsource than small businesses.
- 36% of workers in the US are part of the “gig economy.”
- The global outsourcing market was worth $92.5 billion in 2019.
- By 2025, the global IT outsourcing market will be worth $397.6 billion.
- 83% of IT leaders are planning to outsource their security to an MSP in 2021.
- 24% of small businesses outsource to increase the efficiency of their business.
General Outsourcing Facts and Stats
The definition of outsourcing is hiring a person who doesn’t work in your company to perform your company’s services. Most companies use outsourcing to reduce costs. Outsourcing can link to various job positions, from IT to customer support.
This business strategy was first recognized in 1989.
1. 64% of leading companies have chosen RPA (robotic process automation) as a digital enabler.
The world-renowned Cloud is just some 4% ahead, with 68% of the leading industries employing Cloud as one of their digital enablers.
Deloitte outsourcing statistics also report that there is no concern over the performance, as it was the case in 2018 when 50% of the surveyed expressed their qualms. However, nowadays the biggest concern revolves around remaining competitive and whether one should go for one digital provider or more.
2. Owing to the pandemic, 48% of businesses worldwide will increase RPA adoption by 5% or more.
The post-pandemic challenges will most likely be dealt with through automation, judging by outsourcing statistics. That said, 57% of employers claim that their employees are pretty anxious about these workplace changes. Many of them are afraid they won’t be able to succeed with their work due to automation and stress caused by the pandemic.
75% of the companies are using RPA in order to support the remote workforce.
3. Around 300,000 jobs are outsourced by the US annually.
When it comes to the United States outsourcing statistics, a large number of jobs are being sent overseas, leaving hard-working Americans without employment.
4. India’s IT outsourcing industry will witness a CAGR growth of 7.25% by 2025, reaching INR 8,830 billion ($121,335,149.20).
(Outsource Accelerator) (Classic Informatics)
India is the leading IT outsourcing country in the world. Why India? There are many reasons. For example, India has no communication barriers since it’s one of the largest English-speaking countries. Furthermore, outsourcing is far cheaper compared to other developed countries.
In the same fashion, Indian outsourcing industry statistics imply that by 2023/2024, the country will have the highest number of software developers. India might even overtake the US in this matter.
5. IBM is the largest outsourcing company in the world.
IBM has a revenue of $76.5 billion and a market cap of $105.66 billion. In addition to that, based on the outsourcing jobs facts, there are 383,800 people working for this multinational technology giant based in New York.
The silver medal belongs to Deloitte, a company with a revenue of $47.6 billion. Accenture, a company from Ireland, comes third with $44.7 billion in revenue.
6. The top reason for outsourcing (70%) is cost reduction.
The second reason is flexibility (40%). Speed to market is important to 20% of businesses. Access to tools and processes and agility matter to 15% of the surveyed, according to Deloitte’s outsourcing statistics graphs.
7. 14.4 million is the number of workers US overseas affiliates hired in 2018.
The said companies employed people in various sectors, spanning from technology and call centers to human resources and manufacturing.
8. By the end of 2021, the overall value of outsourced IT services will surpass $413.72 billion.
The total IT budget in 2020 grew from 12.7% in 2019 to 13.6%. In 2020, middle-sized tech companies were responsible for the largest IT outsourcing industry growth.
Despite the pandemic, some tech businesses even decided to increase their IT budgets, outsourcing statistics from 2020 show. Others collaborated with their offshore and nearshore IT outsourcing partners.
9. 58% of companies started adopting Artificial Intelligence.
AI is a new rising trend that became accepted by many companies. Based on one survey, 29.4 of workers are expected to undergo additional training as a consequence of intelligent automation implementation.
On that note, companies that already use RPA are more likely to accept AI adoption.
10. 58.8% of US marketers saw no covid-related changes in the outsourcing marketing activities.
U.S. outsourcing statistics from 2020 show only 19.4% of marketers observed a change in the outsourcing marketing activities during the pandemic.
11. 36% of workers in the US are part of the “gig economy.”
The gig economy is made up of freelancers and people who take short-term contracts in exchange for payment, which also includes freelancers operating in the outsourcing sector.
Freelance statistics show they are very satisfied with the income. In a like manner, the highest paying gig economy job in 2020 was massage therapy. Their average hourly rate was $27.84.
Outsourcing Facts and Figures — Market Value and Cybersecurity
How much is the outsourcing market worth, and what’s the role of cybersecurity?
12. The global outsourcing market was worth $92.5 billion in 2019.
Americans had the largest revenue share. As the US outsourcing statistics from 2019 report, its outsourcing market was worth $62 billion. Europe, the Middle East, and Africa were close behind, while the Asian Pacific region had the smallest global revenue share.
13. $66.5 billion was the global revenue of IT outsourcing in 2019.
But wait, there’s more!
Another $26 billion in global revenue was generated by BPO (business process outsourcing) the same year, according to outsourcing statistics from 2019.
14. By 2026, the global IT outsourcing market will be worth $425.19 billion.
It’s expected that it will register a CAGR of 4.5% between 2021 and 2026. When it comes to market shares, India will be one of the leading countries.
Its IT-BPM already helped with the country’s socio-economic growth. What’s more, many leaders in India, political and business, find it to be the country’s future. On that note, Bengaluru is proclaimed as the best city for an IT professional in India.
Plus, India’s IT outsourcing market is expected to be worth INR 8,830.14 billion ($120.67 billion) by 2025.
15. 65% of CISOs outsourced 21%–30% of their cyber operations, outsourcing statistics report.
Most of the small and mid-sized businesses don’t have big budgets for cybersecurity. This is where outsourcing comes in handy. About 14% of companies report outsourcing over 50% of their cybersecurity operations.
16. 83% of IT leaders plan to outsource their security to an MSP (manage service provider) in 2021.
The main reason for this move comes as a result of COVID19. Namely, in 2020, 89% of the surveyed industries had to speed up the digital transformation. Naturally, this led to stretching the existing resources and increased exposure to cyber attacks.
Many companies had cyber challenges, so it’s only logical that these outsourcing trends from 2020 will continue in 2021.
17. The MSP market is to reach $41 billion by 2022 due to outsourcing security functions.
Security operations are the most important cybersecurity services that should be outsourced. Since companies need 24/7 monitoring, the most important outsourcing service is having a security team that will protect all the important data (website, communication channels, database). Equally important is creating the security strategy and security architecture.
However, if you want to have more control over the decisions, hiring a consultant is a better option than hiring an outsourcer.
Small Business Outsourcing Statistics
How important is outsourcing to small businesses, and should they hire outsourcers?
18. Larger companies are 66% more likely to outsource than small businesses (merely 29% of them outsource).
Exactly why this is so isn’t clear. Yet, it could be that smaller companies (fewer than 50 employees) don’t have the financial means to invest in outsourcing services, unlike bigger companies that have more financial resources at their disposal.
19. Around 37% of small businesses use outsourcing to handle at least one of their business processes, the latest offshoring statistics indicate.
This could be anything from IT and HR operations to customer service and data protection.
For instance, accounting and IT services make up 37% of all outsourced jobs, whereas digital marketing makes up another 34%.
20. 24% 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 give more free time to their employees.
21. The top three ways outsourcing can help small businesses are — generating profit, growing revenue, and improving cash flow.
In essence, the top five challenges small businesses face are hiring new employees (50%), increasing profit (46%), employee healthcare (44%), growing revenue (39%), and managing cash flow (34%).
Generally, by outsourcing, you hit two birds with one stone. How? Outsourcing eliminates the need for hiring employees and buying employee healthcare while still providing a solid boost to those mentioned above.
Outsourcing Statistics by Industry
Which industry has the most success with outsourcing?
22. Accounting is the most outsourced industry sector.
37% of small businesses outsource accounting and finance. The same percent of businesses outsource IT, while 34% use outsourcing for digital marketing.
23. 24.5% of all organizations are going to increase outsourcing efforts or outsource for the first time in 2021.
Companies that have between 10,001 and 50,001 workers are most aware of how vital outsourcing is. 61.1% of the big companies are ready for the said investment.
51.6% of businesses with 1,000—10,000 employees are going to do the same.
24. Statistics on outsourcing show 70% of the IT industry market worth will originate from outsourcing by the end of 2021.
Based on the estimations, the IT industry will be worth $413 billion by the end of this year. And guess what? 70% of the mentioned money will come from outsourcing.
Technology is constantly evolving, so companies need to make sure to follow the trend. Over 94% of organizations using IT outsourcing make due improvements by using cloud services.
25. HR consulting is the most common service among HR outsourcing organizations.
HR outsourcing statistics imply that HR consulting is the most common service among HR outsourcing organizations (45%).
The second most common service is benefits administration (36%), followed by time tracking (24%) and insurance services (19%). Only 10% of services are associated with performance management.
26. 70%–80% of the finished manufactured products are outsourced.
To cut down the costs of labor, numerous manufacturing companies turn to outsource. Based on the outsourcing cost savings statistics, China is the most popular country for manufacturing outsourcing since the labor cost is cheaper.
In other words, the minimum wage is $162–$358 per month, which means that companies can save 30%–80%. Yet, this is rather higher than in India, where monthly wages vary from $66 to $202.
27. When it comes to the banking industry, 40% of help desk positions are outsourced.
Help desk specialists maintain the relationship between the company and the customer. They also help customers with questions and technical support. On top of that, 85% of customers are willing to pay more money to receive an improved help desk experience.
How common is outsourcing?
(Outsource Accelerator) (Clutch)
Outsourcing is incredibly common. Over one-third of small businesses use outsourcing to help them become more efficient, increase their skill, and give their employees more free time.
In fact, many companies (small and big) use outsourcing to reduce their costs and have more flexibility. India is the leading country globally when it comes to IT outsourcing, followed by the Philippines and the US.
What percentage of US companies outsource?
68% of US companies outsource to low-cost countries. The most outsourced services are accounting, IT service, digital marketing, development, human resources, and customer support.
The biggest US outsourcing company is IBM which currently has 383,800 employees, a revenue of $76.5 billion, and $153.4 billion in assets. Deloitte holds second place, with a $47.6 billion revenue and 330,000 employees.
What percentage of American jobs are outsourced?
While there is no definitive answer — keeping track of outsourcing contracts at any moment is incredibly difficult. What we do know, however, is that each year around 300,000 jobs are being sent overseas.
In other words, that’s a huge chunk of US jobs being handed over to other countries.
Which countries outsource the most?
The US is the leading outsourcing country as it made 84.2% of outsourcing deals in 2017. The UK and Australia take second place on the leading outsourcing markets list.
In terms of the top countries where work is being outsourced, we have India with its IT specialists. Next, the Philippines, which specializes in customer service roles.
Ukraine and Poland are also becoming popular, especially in the IT sector. On the other hand, China is the most popular country for manufacturing outsourcing.
How much has outsourcing increased?
Quite a bit. In 2015, it sat at $88.9 billion, only to drop to $76.9 billion in 2016. In 2017, it climbed back to $88.9 billion, then dropped to $85.6 billion in 2018 before rising to $92.5 billion in 2019.
The market statistics show it fluctuated quite frequently over the past five years.
Is outsourcing increasing or decreasing?
Due to the pandemic, the outsourcing industry is expected to increase.
First of all, since companies started to incorporate a remote working model, people have become more comfortable with virtual meetings, interviews, and hiring.
Secondly, the companies are trying to preserve their money due to the economic crisis, leading them to turn towards outsourcing.
And lastly, outsourcing is still one of the essential tools for client organizations and strategies.
How big is the outsourcing industry?
The global outsourcing industry was worth $92.5 billion in 2019. The reports show us that we can expect it to reach $114 billion by 2025.
Therefore, the outsourcing industry is pretty big. In fact, along with the oil and gas, the outsourcing industry is one of the biggest benefactors to the global economy.
By now you should have a much better understanding of why companies outsource.
Whether they be budding startups or large corporations, the target goals are the same — cutting costs, working on core business functions, getting expert help, and so on.
Hopefully, our outsourcing statistics, as well as our general overview of global outsourcing companies, satiated your curiosity and gave you more insight into how the outsourcing market works.
30% of the US-based companies outsource at least one function, and this IT outsourcing trend is not declining. 57% of companies outsource their work to increase productivity. 24% of SMBs that outsource do so to increase efficiency. 64% of outsourced services are related to software application development.How much of US labor is outsourced? ›
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.Is outsourcing in the US increasing or decreasing? ›
Worldwide, the financial services outsourcing market is worth over $130 billion. U.S. outsourcing statistics suggest that outsourcing in the financial services market will continue to rise by almost 7.5% annually.Which country outsources the most? ›
The US has the most percentage of outsourced jobs in the world, with almost 68% of companies delegating their services.What are the 4 types of outsourcing? ›
- Professional outsourcing.
- IT outsourcing.
- Manufacturing outsourcing.
- Project outsourcing.
- Process outsourcing.
- Operational outsourcing.
Key to global market
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.
|1. Google||Multinational technology company|
|3. Unitedhealth Group||American managed health care company|
|4. Wells Fargo||Financial services firm|
|5. Nike||Footwear manufacturing company|
|6. Hewlett-Packard (HP)||Information technology corporation|
The Bottom LineThe short term gain derived by companies that outsource operations offshore is eclipsed by the long term damage to the U.S. economy. Over time, the loss of jobs and expertise will make innovation in the U.S. difficult, while, at the same time, building the brain trust of other countries.Is outsourcing declining? ›
As shown in Figure 1 from the full study, the percentage of the total IT budget being spent on outsourcing declined from 11.9% in 2017 to 9.4% in 2018. This represents a major decrease even from previously established norms as organizations have hovered between 10.2% and 10.6% before last year's temporary increase.Why is outsourcing declining? ›
But the market for offshoring has been drying up, mainly due to wage growth in those traditional offshoring markets, but also due to perceived reductions in customer service quality which have had an adverse effect on customer retention.
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.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.Who is the father of outsourcing? ›
Though the “father” of outsourcing may well be the early 19th-century British economist David Ricardo with his economic principle of “comparative advantage”, it was only in 1989 that imaging solutions company Eastman Kodak took the then revolutionary step of outsourcing its information technology systems.What companies failed at outsourcing? ›
- Cambridge University NHS Foundation Trust and Epic.
- The State of Indiana and IBM.
- The State of Texas and IBM.
- Virgin Airlines and Navitaire.
- Royal Bank of Scotland and Their IT Vendor.
Business process outsourcing is the most common type of outsourcing. It refers to contracting any business process to a third-party service provider. This type usually deals with repetitive tasks such as customer support and administrative roles.What are 3 disadvantages of outsourcing? ›
- loss of control.
- negative impact on staff.
- data protection and confidentiality risks.
- lack of consistency.
- financial and reputation risks.
- less flexibility.
- Customer Service Outsourcing. ...
- Finance & Accounting Outsourcing. ...
- Catalogue Management Outsourcing. ...
- Outbound Sales For Growth. ...
- Back Office Outsourcing.
- Improved focus on core business activities. ...
- Increased efficiency. ...
- Controlled costs. ...
- Increased reach. ...
- Greater competitive advantage. ...
- Offshore outsourcing issues.
Outsourcing allows you the time and resources necessary for focusing on other aspects of the company, while still providing customers with high quality service they expect from their favorite brands. Even with all the pros, a major reason for the practice of outsourcing is to run a successful business model.How large is the outsourcing market? ›
|Largest Market||Asia Pacific|
|Forecast Year||2022 to 2030|
|Key Players||Accenture, Cognizant, Capgemini, Infosys, IBM, HP, Oracle|
What Makes Outsourcing So Popular? Reasons for outsourcing mainly include lowering a company's costs, reducing the investments of an enterprise in capital expenditures, reducing the need for in-house staff training, and generally improving the utilization of a company's resources.What is the number 1 BPO in the world? ›
1. Accenture. Accenture is a cutting-edge IT company as well as a BPO offering a talented workforce. They have a presence in over 120 countries and employ more than 500,000 people globally.What are the three 3 most common outsourcing types practiced by companies? ›
- Local Outsourcing. Contracting a provider within your country is called local outsourcing or onshore outsourcing. ...
- Offshore Outsourcing. Another option is offshore outsourcing. ...
- Nearshore Outsourcing.
Outsourcing Can Eliminate Jobs From the Domestic Workforce
Presumably, those workers who lose those jobs go on to get better jobs in new industries or through better training and education. Manufacturing jobs are a prime example.
Job loss occurred in all states and the District of Columbia, but given that the trade deficit in computer and electronic parts sector grew the most – and accounted for 39.6 percent of total job losses – the hardest hit state was California, which lost more than 560,000 jobs.What is a huge negative to outsourcing? ›
Outsourcing has caused high unemployment, loss of income and loss of competitive advantage, leaving people without financial support and employment.What are two most frequent causes of outsourcing problems? ›
- Problem #1: Lack of Experience with Outsourcing. ...
- Problem #2: Lack of Expertise with The Outsourced Task. ...
- Problem #3: Poor Cost Estimate. ...
- Problem #4: Choosing the Right Vendor. ...
- Problem #5: Lack of Cultural Context. ...
- Problem #6: Contractual and Legal Processes.
- Core Competencies. ...
- Need for Specialized Services. ...
- Quality of Product or Service. ...
- Internal vs. ...
- Internal Capacity Constraints. ...
- Strategic Process. ...
- Delivery Time. ...
- Regulatory Requirements.
- Onshoring. Relocating work or services to lower-cost location in the company's own country.
- Offshoring. Relocating work or services to third-party providers overseas.
- Nearshoring. Relocating work or services to people in nearby, often bordering regions and countries.
Among the 5 location-based outsourcing models, multisourcing is dubbed as the 'best of the breed' because it involves selection of more than one service provider to ensure that each function is given to the best possible team.
- 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.
The two most frequent causes of outsourcing problems include: poor service definition and cost over-runs.