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 2020, the gig economy is flourishing and 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 2020.
Key Statistics on Outsourcing – Editor’s Choice
- More than 654,000 Californians have lost their jobs since 2001 due to outsourcing to China.
- There are 57 million freelance workers in the US.
- Over 93% of organizations are considering or have adopted cloud technology to improve outsourcing.
- Business Processing Outsourcing (BPO) market size is expected to reach $405.6 billion by 2027.
- Focusing on core business is a main motivation for outsourcing IT functions.
- Accounting and IT are the most commonly outsourced jobs in the SME sector.
- More than half of all companies use third-party support teams to connect with customers.
- The global IT outsourcing market is expected to grow by $98 billion by 2024.
1. The market size for global outsourcing reached $92.5 billion over the last year.
Global outsourcing revenue has been on an unstable trajectory since 2012. Revenue peaked at $104.6 billion in 2014, then dropped to $76.9 billion two years later. The latest outsourcing statistics 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; 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 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 by cutting jobs, 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.
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.
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. However, it increased to 12.7% in 2019.
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 two 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 more recent study found that the percentage of the total IT budget spent on outsourcing increased to 12.7%. This increase was primarily driven by small businesses preparing for a possible recession.
The global IT outsourcing market is expected to grow by $98 billion during 2020-2024, rising at a CAGR of 5%.