Global markets and improvements in technology have changed the way businesses work. For many, staying competitive means capitalizing on the world being a smaller, more tech-savvy place and enjoying the benefits of outsourcing.
Hiring an overseas workforce to outsource certain business functions can lead to lower overheads, increased growth and greater focus and service quality. Combined, these benefits mean a happier-looking bottom line. On paper, it all sounds great, but for a business sitting on the fence about whether to offshore, promises and benefits that ‘sound great’ aren’t enough. You need evidence, and you’ve come to the right place—our ultimate list of outsourcing statistics for 2024.
The state of play
For more than 20 years, renowned professional services firm Deloitte has been conducting surveys to understand the evolution of outsourcing and provide insight into the issues and trends affecting both providers and clients. In their survey report ‘Navigating Talent, Technology, and New Ways to Outsource1’, the company revealed that the battle for talent has reached an unprecedented intensity and the rules of outsourcing are changing as third-party models evolve to enhance business and IT processes with AI and data insights.
Key findings included:
- 50% of executives identify talent acquisition as the top internal challenge in meeting their organizations’ strategic priorities – despite more than half reporting an increase in staff across the past year to support growth.
- 62% of executives say they are ill-prepared to address the causes and impacts of poor employee retention.
- 32% of executives indicate a budget increase for traditional outsourcing with growing demand for access to hard-to-source talent and expertise on technology and transformation.
- Executives chose cybersecurity as the number one external challenge they face in achieving their strategic objectives, with 81% turning to third-party vendors to provide such capabilities.
- 96% of executives cited outsourcing providers as the source for the development of data and analytic capabilities.
What remains clear is that outsourcing providers need to continue to evolve and adapt to rapidly changing conditions as they seek to provide value-added services and high-impact business outcomes for their clients.
Why businesses outsource
Clutch asked 517 small business leaders in the U.S. about their top business objectives and the role outsourcing would play in filling any gaps2. The survey found that optimism prevails, with most small businesses viewing outsourcing as an effective strategy to remain agile and fill critical skills gaps.
Key findings included:
- 83% of small businesses will maintain or increase their spending on outsourced business services.
- The primary motivations for outsourcing tasks were a near-tie between reducing expenses and bringing industry experience onto the team.
- 52% of small businesses regularly use a professional firm or agency for outsourcing.
- 64% of small businesses have actions planned to combat a recession.
The survey confirmed a well-known fact: cost savings remain the top motivation for outsourcing. Businesses can save up to 70% on labor costs by using an offshore provider3. One survey respondent, who has collaborated with an outsourced copywriting agency for four years, stated, “outsourced providers chip in with expertise that helps plug gaps in-house, ensuring small businesses can compete even with limited budgets.”
The survey also revealed that despite talk of a boom in the gig economy, most small businesses still prefer to use professional outsourcing providers. 52% of respondents regularly use services provided by a professional firm or agency, preferring the structure and safety that comes with partnering with a known entity.
“Freelancers need more management and often don’t have systems in place that fit all or most companies so the business owners end up having to manage the freelancers,” one eCommerce shop owner told Clutch. “Agencies typically have an organizational structure that allows feedback to a manager who then manages the specialist actually performing the work for the business.”
A financial juggernaut
Outsourcing has evolved from a smart idea into a multibillion-dollar industry with no signs of slowing down. As businesses seek more flexibility in accessing talent, outsourcing continues to grow.
- The global business process outsourcing (BPO) market is expected to reach $525 billion by 20304.
- The global outsourcing market is worth $92.5 billion in total contract value (TCV)5.
- IT services make up around three-quarters of all global outsourcing contract values5
- 92% of G2000 companies use IT outsourcing5.
Spotlight on services
Certain business functions and industry sectors lend themselves better to outsourcing than others due to practical issues around setup and management. Clutch found that small businesses are seeking new outsourced providers in marketing (27%), IT services (22%), and design (21%)2.
Other statistical insights include:
- 83% of IT leaders are considering outsourcing their security efforts6.
- 90% of companies consider cloud computing a key enabler in their outsourcing efforts7.
- Companies that outsource HR can save an average of 27.2%8.
- Strong problem-solving skills are the most important factor for small businesses choosing an outsourced team9.
Across the globe
When it comes to outsourcing, the world has never been smaller. Technology allows businesses to partner with offshore providers wherever there is strong connectivity, and the remote work trend has instilled confidence in businesses looking for support outside their four walls.
Consider these statistics when deciding where to direct your outsourcing budgets:
- Seven of the top 10 countries on the Global Services Location Index are in the Asia-Pacific region – India, China, Malaysia, Indonesia, Vietnam, the Philippines, and Thailand 10.
- 9% of the Philippines’ GDP comes from business process outsourcing11.
- More than 84% of outsourcing deals come from the U.S12.
- 29% of U.S. businesses with fewer than 50 workers outsource13.
- 70% of British B2B companies outsource key business operations14.
Are you ready to start your outsourcing journey?
Take the next step on your outsourcing journey by exploring our ‘Case Study Portfolio - Real Challenges, Our Solutions’, which showcases 12 in-depth, real-life examples of how offshoring in the Philippines has reaped rewards for organizations in industries as diverse as healthcare, eCommerce, insurance and tourism.
