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 2019 it has completely overtaken 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 2019.
Key Statistics on Outsourcing – Editor’s Choice
- Almost 54% of all companies use third-party support teams to connect with customers.
- Globally, businesses are expected to spend $75.2 billion on outsourcing security in 2019.
- There are 53 million freelance workers in the US.
- 78% of businesses all over the world feel positive about their outsourcing partners.
- About 300,000 jobs get outsourced out of the US each year.
- 71% of financial service executives outsource or offshore some of their services.
1. The market size for global outsourcing reached $85.6 billion in 2018.
Global outsourcing revenue has been on an unstable trajectory since 2012. Revenue peaked at $104.6 billion in 2014, then dropped to $88.9 billion the very next year. Outsourcing statistics from 2018 show that the trend of rising and falling revenues has continued, though the market does seem to be stabilizing somewhat.
2. About 300,000 jobs get outsourced out of the US each year.
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, and we’ve just lived through the second largest recession in history. It is not surprising, then, that during the height of the Global Recession, 86% of Americans blamed outsourcing for exacerbating the crisis.
3. More than 93% of organizations are considering or have already adopted cloud services to improve outsourcing.
The move toward cloud technology will help companies of all kinds be 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 the costs, but to be more competitive and have greater possibility to innovate.
4. Data security is a top concern for 68% of outsourcing companies who are considering moving to cloud technology.
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 laws. IT outsourcing statistics point to an additional concern that has everything to do with performance: 45% of outsourcing businesses have worries that a cloud-based service may not be stable or reliable enough. Some 35% of respondents identify fear of losing intellectual property as their biggest concern.
5. Over 44% of chief intelligence officers say that they are more likely to use outsourcing suppliers than they were just five years ago.
Offshoring statistics from 2018 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.
6. Saving money is a major motivation for outsourcing IT.
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.
7. 71% of financial service executives outsource or offshore some of their services.
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% outsource services.
8. 83% of financial companies and institutions are implementing or considering implementing robotic process automation.
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 of the financial and other industries 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.
9. Outsourcing dropped from 11.9% in 2017 to 9.4% of IT budgets in 2018.
A comparison of outsourcing statistics from 2017 and 2018 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, with a 6% decrease compared to the year before. The reason for such a drop, even when large outsourcing companies are increasing their operations, is that small and medium businesses are more and more turning to cloud technology.
Outsourcing % of Total IT Budget
10. More than 560,000 Californians have lost their jobs to China since 2001.
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 3.36 million jobs that the United States has lost to China since 2001, 1.2 million are in IT and electronics parts manufacturing.
11. Worldwide, the financial services outsourcing market is worth over $130 billion.
U.S. outsourcing statistics from 2018 suggest that outsourcing in financial services market will continue to rise by almost 7.5% annually. Big banks and other financial institutions will be 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.
12. The global outsourced customer experience market in 2018 was estimated at $75.1 billion.
Outsourcing statistics by year demonstrate that customer service is among the most outsourced processes among large companies and financial organizations. Since most businesses believe that improving customer experience is a top priority, it is not surprising that growth is projected to continue throughout 2020. By then, the value of the market is projected to increase to $82.6 billion.
13. The most commonly outsourced jobs in small businesses are accounting and IT.
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 is 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%.
14. About 24% of small businesses outsource to improve efficiency.
Small business owners care about efficiency above all. Compared to larger companies, these businesses usually cannot afford or simply do not have access to necessary resources. 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.
15. 29% of businesses with fewer than 50 employees outsource, compared to 66% with 50 or more employees.
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 focusing heavily on bringing back manufacturing and other outsourced industries, and the ongoing trade war threatens to increase service expenses further. While the situation in China currently feels stable, many companies are already leaving and sourcing workers in India, the Philippines, Vietnam and so on.
The outsourcing statistics we 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.