If a job can be done cheaper somewhere else – it will be. That’s outsourcing in a nutshell. The global industry outsources jobs in all areas; IT, media, telecom, business services, retail, travel transport, healthcare, and everything in between. While outsourcing statistics show that most outsourced jobs are created to cut costs, sometimes this practice allows the company to focus on its main business branch and resolve capacity problems. Tax evasion isn’t excluded either. Read on to learn the most important stats and facts on outsourcing.
The last decade’s lowest point was in 2016 when the market worth was only $76.9 billion. The decade’s highest market worth was in 2014 with $104.6 billion. Region-wise, the Americans hold the largest share in the outsourcing industry followed by Europe, the Middle East, and Africa, and a significantly lower contribution from the Asia Pacific.
This outsourcing subcategory refers to specific business processes, usually internal functions (i.e. back office) or customer-facing operations (front office). While the Americas were in the lead for outsourcing work, Southern Europe has emerged as the region with the biggest share of businesses either practicing or planning to practice BPO.
These payroll outsourcing statistics come from a survey covering 1,892 respondents. The stats further indicate that back in 2015, only eight percent outsourced their payroll function.
Just under 60% of businesses do this to cut costs. The leader in IT outsourcing is Accenture with an outsourcing revenue of $20.1 billion. Next on the list are Cognizant Technology Solutions with revenue of $16.65 billion and Infosys whose annual revenue stands at $13.56 billion.
The reason behind it is the same as in other industries, cutting labor costs. Other reasons include faster turnaround, smoother operation, and limiting the size of the government, and by extension, taxpayer money. But why doesn’t the government employ at home? The answer is quite simple: government workers in the US have to have benefits paid, while outsourced workers don’t, as confirmed by government outsourcing statistics.
Across the US, jobs lost to outsourcing in 2017 numbered 311,427 by government count. Out of this number, 202,543 are listed as offshored. The Economic Policy Institute meanwhile claims total trade job loss is 700,000 jobs to China alone. The 2020 jobs lost to outsourcing statistics are still being processed.
Only 19.4% of marketers saw a change in the outsourcing marketing activities during the pandemic, while 58.8% say they weren’t impacted. The total IT budget in 2020 grew from 12.7% in 2019 to 13.6%.
With a revenue of $76.5 billion and a market cap of $105.66 billion, the company has a massive 383,800 employees. Following is Deloitte with a revenue of $47.6 billion and Accenture in third place with $44.7 billion in revenue. Synnex and Tata Consultancy Services round out the top five.
Skilled staff, huge numbers of available workers, and financial attractiveness all make India the most desired outsourcing destination in 2021 surveys, with results of 2.83 and 2.18 on staff availability and financial landscape, respectively. In the testing of digital resonance, India scored 0.91 while the US had the result of 1.15.
While the western countries have developers in abundance, they charge anywhere from $70 to $150 per hour. The same job can be done by hiring staff from India for $20 to $40 per hour. The appeal of India is not only in the low cost of the wages but also the opportunity to hire fully formed teams at once, including project managers and developers, and all English-speaking staff. And working round the clock thanks to the time zone differences is a major perk as it allows a company to have two or more teams around the globe online nonstop and double the hours as outsourcing to India statistics reveal.
This represents an increase of 2.5% on average in the period between 2017 and 2022. The distribution of companies in the business process outsourcing industry in Australia is as follows: New South Wales — 38, VIctoria — 28, and Queensland — 17 businesses.
Australian outsourcing statistics show that the top outsourcers Down Under are:
Australian companies mostly tend to outsource work to the Philippines.
(Ibis World, Outsource Accelerator)
Other costs represent purchases with 13.5% and rent and utilities with 1.88%. Australia holds one of the lowest market shares in the outsourcing industry and the largest company is considered to be Hays Specialist Recruitment.
All these companies offer services to foreign businesses, the PRC Ministry of Commerce reports. One factor that pushes China forward is the difference in wages compared to India, most notably the lower costs of manual labor and manufacturing outsourcing. The IT wages gap meanwhile is not as prominent as the salaries have gone up by 15%, making China slowly coming closer to bridging the gap.
(China Business Review)
The future trends in the Philippines show the need for mid-level and highly skilled workers was estimated to rise for 73% of job roles in IT by 2022. Compared to the year before the number of jobs grew by 5.8%, from 1.23 million to 1.3 million.
The overall value of business process outsourcing business in 2018 in the UK was £2.7 billion. A Government poll from 2019 meanwhile revealed that 48% of UK startup companies outsourced parts of their services due to the lack of trained in-house staff. Furthermore, 30% use the practice to achieve better results. Also, in 2020, nearly a third of businesses in the UK expected to outsource more.
The Canadian job market mostly outsources to India. The main branch of outsourcing in the country is accounting, while the nation’s biggest outsourcer is the CIBC bank which made $1.4 billion in profit just in a single quarter. The Toronto-based company, however, is reported to be mostly outsourcing work elsewhere in Canada, rather than overseas.
According to Finances Online and Statista, 66% of all global call centers are located in the US. The need for high-quality call centers is always growing and 59% of customers say that their expectations of what good customer care is is higher than it was in the previous year. Moreover, The global call center AI market will hit $4.7 billion by 2026. Call center outsourcing statistics reveal that the call center industry in China is expected to grow to $87.4 billion by 2027 with a CAGR of 5.2% but the question of how much of it is outsourced to other countries remains.
(Finances Online, Callminer)
HR outsourcing has been on the rise, and around 31% of the companies have over 5,000 workers, and the top 10% hire over 20,000 employees. The top services offered by most organizations, according to HR outsourcing statistics, include:
A lot of the global manufacturing outsourcing is done in China. This comes as a consequence of low labor costs and the number of available workers. That said, foreign companies occasionally outsource jobs to the US, according to manufacturing outsourcing statistics.
The bulk will come from the US, or around $131 billion. On average, spending per employee in software outsourcing is around $104.79.The anticipated annual growth rate for the period from 2021 to 2026 is 8.93%, which will bring the market volume up to $552 billion by 2026.
In 2018, 37% of small businesses were outsourcing business processes. Two of the most outsourced areas are accounting and the IT outsourcing industry with 37% each, followed by digital marketing with 34%. The decision to outsource comes not only from the need to cut costs but also to increase efficiency in 24% of cases or get experts on board 18% of the time. Corporate outsourcing statistics show that companies with more than 50 employees outsource in 66% of cases. Small businesses with fewer than 50 workers do so in 29% of cases.
The outsourcing industry is huge and growing still. If the COVID crisis has taught companies anything it is that almost anything can be done remotely. While cost-cutting seems to be the primary driver behind the practice, talent seeking and hiring high skilled workers also play a part, outsourcing growth statistics show. Another great benefit is the ability to not stop production due to work hours if the tasks are dispersed around the globe and someone is always working. Ideally in a country that has much lower wages and an educated workforce.
The number of globally outsourced jobs is hard to determine and ever-fluctuating. In 2019, the global market size of outsourced services was estimated to be $92.5 billion and revenue reached $26 billion.
With IT jobs being outsourced in particular more and more every year, it is unclear how many workers really are out there. Some statistics on outsourcing pointed to 500,000 jobs that have been outsourced since the year 2000, but current stats say it is 300,000 every year just from the United States.
(Statista, Love to Know)
Officially, stats show that there are over 300,000 jobs outsourced every year by the US. In reality, however, this number could be more than double that.
Over 68% of big US companies outsource parts of their production processes.
The top reason for global outsourcing is cost reduction. IT companies especially benefit from outsourcing jobs for two reasons, lower wages and highly qualified staff. IT outsourcing statistics show an ideal combination is most often found in India. With the clever use of timezones, a company can have two or three teams working round the clock.
US companies outsource jobs in order to cut costs and increase productivity. With wages and living costs often lower overseas, a company can have full teams hired for a much lower cost than at home. This leads to the final cost of products being lower and the company gains a more competitive spot on the US market.
According to job outsourcing statistics, accounting and IT services are the ones being outsourced the most. Digital marketing is third, but manufacturing, mobile, financial services, and customer care are also commonly known as highly outsourced services.
The exact number of people in outsourcing is impossible to determine even as an educated guess. All industries across the globe outsource a fraction of their work. Numbers from 300,000 to 700,000 US jobs are being outsourced. Manufacturing outsourcing to China and the IT services in India count millions of workers.
(Compare Camp, Ottawa Life)
The US is the world’s leader in outsourcing jobs as 68% of businesses outsource working processes. Outsourcing and unemployment statistics show 14 million outsourced employment opportunities were lost in 2017 alone.
(Outsource Accelerator, Deccan Chronicle)
Many companies that outsource jobs do so the most in the following industries:
Sources: Statista, Statista, Statista, Statista, Brandon Gaille, Citizen, Statista, Insider Monkey, Statista, Classic Informatic, Ibis World, Outsource Accelerator, China Business Review, Magellan Solutions, Cyber Crew, Pearsoned, CBC, CBC, Finances Online, Callminer, Extensis HR, Orient, Statista, Clutch, Microsourcing, Love to Know, Aptude, Reliable Plant, Chegg, The Balance, Compare Camp, Ottawa Life, Outsource Accelerator, Deccan Chronicle