The society operates in a constant state of change, and so does the business world. With today’s ever-evolving corporate landscape, there are multiple ways to stay ahead of the competition. One effective means to do that is by scouting for top talents to include in your team.
Enter outsourcing, an effective business strategy to achieve quality workforce expansion. It has become a go-to solution for businesses from varying industries to streamline their processes, making them work more efficiently and effectively.
Besides knowing the benefits of outsourcing, here are notable statistics to help you understand just how impactful the outsourcing industry is at present and could be in the future—not just for your organisation but also globally.
Global Outsourcing Facts and Statistics
Here are some global statistics about the outsourcing industry:
The market value for global outsourcing hit $92.5 billion in 2019.
While the outsourcing industry has had a fluctuating trajectory over the years, data from Statista now show a positive revenue trend with a market size increase of $92.5 billion in 2019. This global value is a massive jump from its 2016 numbers of only $76.9 billion.
The outsourcing industry is estimated to be worth $435.89 billion by 2028.
With a market size value of $245.91 billion in 2021, Grand View Research projects the global business process outsourcing (BPO) industry to reach the $435.89 billion mark by 2028, expecting a compound annual growth rate (CAGR) of 8.5% during the forecast period.
The global IT outsourcing market reached $66.52 billion in 2019.
Since 2000, statistics show that information technology (IT) is one of the industries most influenced by the outsourcing process. In 2019, the total value of outsourced contracts in IT amounted to $66.52 billion, which was a step up from the previous year’s $62 million performance.
The IT outsourcing industry is expected to generate $425.19 billion globally by 2026.
With new strategies and solutions for digital transformation, IT outsourcing has become a competitive edge for most organisations worldwide. It is projected to grow into a $425.19 billion market by 2026, registering a CAGR of 4.5% throughout the prediction period.
The outsourcing market for financial services is worth over $130 billion.
As more banks and financial institutions continue to rely on external service providers, the outsourcing industry for finance work, including executive orders, is valued at over $130 billion and is presumed to expand at a rate of 7.5% annually.
Who Is More Likely to Outsource?
Businesses across all industries outsource certain tasks. But some do so more than others. Here are figures about the current trend:
Larger organisations are 66% more likely to outsource than small companies.
According to a report, 66% of businesses with more than 50 employees invest in outsourced services, while only 29% of enterprises with 50 or fewer staff allot a budget for external support in their operations.
Records show that Nike outsources over a million employees globally.
Comparable to globalisation, Nike is one of the first brands to outsource production to developing countries. In 2017, Nike had 1.02 million workers in 42 countries to produce its merchandise, with 44% of production outsourced in Vietnam and 29% in China.
About 84.2% of outsourcing deals came from the United States in 2017.
Despite 71% of Americans believing that outsourcing harms their economy, businesses in the United States still acquire outsourced services that covered 84.2% of the global market in 2017. The United Kingdom came second in the list with 5.2% deals closed, followed by Spain and Australia.
Around two-thirds of pharmaceutical manufacturing is outsourced.
In the pharmaceutical field, Kate Hammeke, Vice President of Market Research at Industry Standard Research (ISR), shared that “only one-third of manufacturing – whether in the development stages or after commercial launch – is conducted in-house.” The rest of the work is assigned to a third-party service provider, with approximately 60% of the process being outsourced.
Why are Businesses Outsourcing?
Outsourcing offers multiple business benefits. Here is why companies outsource:
Cost reduction is the top objective for outsourcing.
Deloitte’s 2020 Global Outsourcing Survey reveals that 70% of executives think that the cost reduction feature of outsourcing is its primary selling point. Despite today’s uncertain economic environment, it remains the top reason for businesses to outsource, followed by flexibility at 40%.
24% of small businesses outsource to increase efficiency.
Unlike larger companies, small businesses don’t always have the means to assemble a team from scratch, which is why they have a lot to gain from outsourcing. A study shows that 24% of growing brands seek outsourced services to improve their work efficiency, while 18% sign up for expert assistance.
83% of IT leaders plan to outsource their cybersecurity efforts.
For all industries across the board, 2020 has been a year of digital transformation. That is why 83% of IT leaders consider partnering with a managed service provider to speed up this unexpected shift and handle any threats that may come along the way.