Outsourcing has been a hot trend since 1989. Over the past three decades, it has become an integral part of business management on a global scale.
That doesn’t mean everyone approves. Opinions vary from highly negative to wildly positive.
However you feel about outsourcing, one thing is certain: In 2021, the gig economy still has to recover from the global pandemic, as do some of the biggest industries in the world.
This is why we think it’s important to dig deeper into the newest data and pull out all the most important outsourcing statistics for 2021.
Global outsourcing revenue has been on an unstable trajectory since 2012. Revenue peaked at $104.6 billion in 2014, only to drop to $88.9 billion the very next year. Outsourcing statistics from 2021 show that the trend of rising and falling revenues has continued, and because of COVID-19 these figures are yet to stabilize.
US outsourcing statistics like this one make it easy to understand why so many people view outsourcing negatively. Negative sentiments are especially strong when there is a big economic crisis; we’ve just lived through the second-largest recession in history, and the full effect of the global pandemic is yet to be seen.
It is not surprising, then, that during the height of the Great Recession, 86% of Americans blamed outsourcing for exacerbating the crisis.
The move toward cloud technology will help companies of all kinds become more capable and responsive while allowing them to rapidly expand their offerings in existing and new markets.
Stats on outsourcing show that a third of all organizations are willing to accept an increase in operating costs if they get access to the cloud in return. This means that for a large number of businesses, the main motivation for this move is not to lower costs by cutting jobs, but to be more competitive and increase innovation.
As cloud technology continues to disrupt the outsourcing industry, some of the main concerns that companies have are related to information security and compliance with the law.
However, IT outsourcing statistics point to an additional concern that has everything to do with performance: 45% of outsourcing businesses worry that a cloud-based service may not be stable or reliable enough. Some 35% of respondents identify a fear of losing intellectual property as their biggest concern.
The latest offshoring statistics show that the IT sector is moving toward outsourced suppliers most quickly. In fact, about 64% of outsourced offshore technology functions have to do with software application development.
About 51% of technology executives say they outsource application and software maintenance, and 40% outsource their data centers.
Freeing up resources to focus on core business is the most widely cited reason for outsourcing IT functions, at 49%. Saving money is secondary, but still a top priority. About 45% of companies outsourcing IT functions say that their information technology outsource projects are meant to save money. About 46% say outsourcing lets them access skillsets that aren’t available in-house.
Financial companies are among those that outsource the most. About 70% of retail and transportation firms do the same, while job outsourcing statistics show that the top spot remains reserved for pharmaceutical companies, roughly 82% of which outsource services.
The trend toward automation is accelerating, as outsourcing statistics like this one show. Robotic process automation is often the first step a company can make toward digital labor, and most financial companies are already implementing it.
What’s more, 81% of financial companies are satisfied with their robots, meaning that continued growth is all but guaranteed. This trend is currently most visible in HR and invoice processing sectors, where bots are increasingly replacing people.
A year-on-year comparison of outsourcing statistics shows a strange and increasing rift between larger and smaller companies that outsource jobs.
IT security and data center operations saw the biggest reductions in outsourcing three years ago, with a 6% decrease compared to the year before. The drop was caused mainly by small and medium businesses turning to cloud technology, thus eliminating the need to outsource the maintenance of internal IT infrastructure.
A recent study showed that the pandemic and switching to a model of working from home didn’t negatively affect global IT outsourcing. On the contrary, spending on outsourcing increased to 13.6% of the average IT budget in 2020.
The global IT outsourcing market is expected to grow by $98 billion from 2020 to 2024, expanding at a CAGR of 5%.
California leads the nation when it comes to jobs lost to outsourcing, mainly because of Silicon Valley and the shrinking of the state’s apparel industry.
A quick look at jobs lost by industry illustrates why California, as the home of most US tech giants, suffered so much. Of 3.7 million jobs that the United States has lost to China since 2001 when the country joined the WTO, 1.3 million are in IT and electronics parts manufacturing.
U.S. outsourcing statistics suggest that outsourcing in the financial services market will continue to rise by almost 7.5% annually. Big banks and other financial institutions will become increasingly reliant on external service providers, which presents many benefits but also poses new risks to the industry.
The most potentially damaging outsourced functions are data management and core business processes.
When it comes to the size of the business process outsourcing (BPO) market (covering fields such as banking, financial services, insurance, healthcare, manufacturing, IT, telecommunications, retail, and others), it is expected to reach $405.6 billion by 2027, growing at a CAGR of 8.0%.
Outsourcing statistics by year demonstrate that customer service is among the most outsourced processes for large companies and financial organizations. Since most businesses believe that improving customer experience is a top priority, it’s not surprising that growth is projected to continue throughout 2020.
The value of the market is projected to increase to $81.5 billion by 2023, rising at a CAGR of 3.51%.
Small businesses usually turn to outsourcing when it comes to accounting and IT because those tasks require proficiency and skills that they might not possess internally. That’s why small business outsourcing stats show that 37% of all accounting and IT tasks get outsourced. Digital marketing tasks follow at 34%, with development and human resources at 28%.
Small business owners care about efficiency above all. Compared to larger companies, these businesses usually cannot afford or simply do not have access to the necessary resources to build a team from scratch.
United States outsourcing statistics show that another common reason (18%) that a small business turns to outsourcing is to increase available expertise and seek expert assistance. The latest research has also shown that 52% of small businesses will continue to outsource especially non-core functions even in the post COVID-19 economy.
Smaller businesses are less inclined to spend money on outsourcing when compared to global outsourcing companies, as they usually feel like it is better to keep the money inside their firm and do things themselves. When they do outsource, smaller companies tend to turn to freelance workers.
The US administration is focused on bringing manufacturing and other outsourced industries back to American soil, but overall, global trade policies remain in constant flux. Tariffs, quotas, and geopolitical factors are sure to keep outsourcing on the radar for many years to come.
The outsourcing statistics we’ve gathered also show an obvious split between small businesses and large corporations as emerging technologies like the cloud and robotic automation change the market even further.
While outsourcing is likely to continue growing, the functions that are outsourced and the companies that rely on outsourcing may change. Operations are generally moving in-house, while key sectors like software development and maintenance remain outsourced.
