25 Key Outsourcing Statistics & Facts

Does “What is happening?” ring true to your ear?

It is the curiosity to stay up to date when it comes to the relevant topics to your life’s influencing factor. For anyone in the tech industry, or even otherwise, keeping up with the current trends in the market can’t be missed, especially the new 21st Century ways of work engagement options, for example Outsourcing.

In this blog, we explore 25 key outsourcing statistics that reveal outsourcing’s current trends, benefits, and challenges that are reshaping the global market.

Top Outsourcing Statistics & Facts

1. Global Outsourcing Market Size Valued at US$280.64 billion

Source: Grand View Research

Businesses around the world are outsourcing non-core business activities and tech requirements to countries with more economically viable options to cut costs. At the same time, this enables them to access skilled labor that may not be readily available locally.

In 2023, the global outsourcing industry reached $280.6 billion. This figure is expected to keep growing as more and more companies seek to offload tasks that aren’t at the center of their business operations so they can focus on their primary business activities.

Many have realized that hiring professionals from other countries can reduce overhead and give them an advantage. With businesses always trying to focus more on their core operations, the trend of outsourcing less important work is expected to keep rising for years to come.

2. IT services account for about 75% of global outsourcing contract value

Source: ISG

Out of the total $92.5 billion made from outsourcing contracts globally, IT services brought in a big chunk, around $66.5 billion. The other portion, about $26 billion, was from business process outsourcing (BPO).

Many companies around the world have turned to IT outsourcing as a way to stay flexible and ahead of the competition. It allows them to keep up with the fast pace of the tech industry while saving costs.

On the other hand, BPO remains essential for handling tasks that aren’t at the heart of a business, letting these companies shift their attention to bigger priorities like innovation and long-term growth strategies. This separation of core and non-core tasks gives businesses more room to develop new ideas and stay focused on what really matters to their success.

3. Around 300,000 U.S. jobs are outsourced annually

Source: Zippia

Each year, roughly 300,000 jobs in the United States are outsourced to more economically viable countries. Outsourcing can offer some advantages, especially from a business standpoint.

Despite the cost savings and access to a global workforce, outsourcing creates a more flexible and efficient business model. Companies can quickly adapt to changes in demand or scale up operations without the need for extensive local resources.

4. Around 70% of businesses save on their expenditure using Outsourcing

Source: Deloitte Global Outsourcing Survey

As reported by Deloitte, a global firm known for offering professional services, around 70% of businesses across the globe are turning to outsourcing as a way to cut down on their operational expenses.

Most of these companies think that by relying on third-party service providers, they can better handle their suppliers and ease supply chain issues, which became more pronounced during the pandemic. The research further indicates that many of these businesses are likely to increase their use of outsourcing.

They’re learning to adapt and work efficiently in a world where the ability to move quickly, stay flexible, and manage costs takes priority over where a business is physically located. 

Outsourcing is especially valuable when a company needs to pivot or adjust fast in times of crisis, like during the pandemic.

5. 24% of Small Businesses Seek Global Outsourcing Services

Source: Clutch

Outsourcing helps businesses run more smoothly because it lets them concentrate on what they do best. Around 24% of companies said they got more efficient by using outsourcing. Working with external vendors companies gain access to specialized knowledge and skills that they might not have in-house, which can lead to better results.

These external experts often bring in processes that are more refined to improve productivity and save time. So, rather than stretching internal resources too thin, businesses can rely on these specialized providers to handle tasks that would take more effort to do on their own.

This means companies can get more done with fewer distractions, which boosts their performance in the long run.

6. The Rise of Offshore Outsourcing

Source: KPMG

Outsourcing is becoming more common, especially in IT and manufacturing and India is frequently chosen by businesses for IT related tasks because they have highly skilled workers who charge less than those in other parts of the world.

They have invested in building a strong workforce capable of handling advanced tasks, making them attractive to businesses looking to cut expenses while still getting quality work done. 

7. An Estimated 15 Million Jobs Have The Potential To Be Outsourced

Source: Bureau of Economic Analysis

In 2015, the U.S. had more than 15 million outsourced jobs, more than double the number of unemployed Americans at that time. Sectors like IT, call centers, HR, manufacturing, and accounting are hit the hardest.  

Countries like India, which have lower living costs, attract businesses looking to hire skilled workers at affordable rates. Cheaper wages, lower operating costs, and simpler administrative processes make it easier and more cost-effective for companies to outsource work there.

8. The most outsourced services are IT (54%), Finance (44%), and Payroll (32%)

Source: Deloitte

The report notices a shift toward using remote work models, which has been largely influenced by the experiences gained during the COVID-19 pandemic which have been showing flexibility in response to the constantly changing political and global environment.

With the world becoming more uncertain and businesses needing to adapt quickly, Shared Services Centers and Global Business Services are proving their worth by adjusting to these new conditions. The pandemic forced companies to rethink how they operate, especially when it comes to where and how their teams work.

Remote models, which were already on the rise, became even more relevant. Now, with the world in a post-pandemic state, these models continue to grow because of the lessons companies have learned.

9. Over 94% of organizations outsource IT services

Source: Statista

Handing off IT-related tasks to external partners has become one of the most effective ways for businesses to manage operations that were once handled in-house. It might seem surprising, but even companies rooted in the tech industry often outsource parts of their services to specialized providers.

These days, there’s no shortage of innovative IT outsourcing companies scattered across the globe, all of which are helping both small businesses and large corporations make the most of technology.

A report from Statista noted that back in 2019, the IT market was valued at just over $120 billion, while the IT outsourcing sector alone was worth $92.5 billion.

This data was further supported by global outsourcing contract values (ISG), which were significantly driven by positive trends in IT services.

Moving forward, industry experts expect the IT outsourcing market to pull in a $541.10 billion by the end of 2025.

10. India remains the global leader in outsourcing

Source: Reuters

India has long been the choice for offshoring and outsourcing, especially for English-language operations. It remains the most established market for service outsourcing, excelling in data processing, data entry, virtualization, and other skilled services.

Over 59% of businesses worldwide outsource some form of service to India, with IT and Business Process Outsourcing (BPO) being the most common. Technical support teams, software developers, and infrastructure services are in high demand. Indian services are often much more affordable while offering the same effectiveness and value as hiring a local team.

India’s talent pool is well-equipped to meet the needs of IT. With over 100 million English speakers, language is not a barrier. Each year, more than 150,000 engineering graduates enter the IT sector, ensuring a steady supply of skilled workers.

However, in response to global fluctuations in demand, some outsourcing providers in India have occasionally delayed hiring new IT staff, opting instead to utilize existing developers to streamline financial strategies.

11. Over 40% of banking help desk jobs are outsourced

Source: Deloitte

Organizations may not have the budget for an internal help desk to support their customers. This has made help desk outsourcing a practical solution.

Research shows that 55% of customers are drawn to excellent customer service, and 85% are willing to pay more for an enhanced help desk experience. This highlights the importance of delivering satisfying customer support.

In 2021, over 40% of banking and financial institutions partnered with outsourcing service providers for help desk staffing. Help desk outsourcing offers several key benefits, including:

• 24/7 Support: Internal teams may be effective, but they often can’t provide round-the-clock support. Outsourcing ensures a team of experts available across shifts.
  
• Expert Call Resolution: Internal staff may not always have the experience to resolve every call. Outsourced experts bring advanced call management skills and deliver better solutions to customers.
  
• Faster Response Time: With modern technology, outsourcing enables quicker response times by dispatching immediate help.
  
• Cost Savings: Outsourcing reduces the costs of labor, technology, tools, and customer attrition.

12. Freelancers make up 38% of the U.S. workforce in 2023

Source: Forbes

Recent findings from Forbes indicate a trend that freelancers now represent a significant portion of the workforce.They fall somewhere between 35% and 40%.

The Upwork Research Institute revealed that about 38% of individuals in the United States engaged in some form of freelance work that same year. This surge in freelancing has contributed nearly $1.3 trillion to the US economy.

13. 92% of G2000 companies use IT outsourcing

Source: ISG

More than 90% of the world’s largest 2000 companies in 2019 had some form of IT outsourcing agreement in place. As it was much more common than other business operations, IT services were the first choice for outsourcing. On the other hand, BPO wasn’t as widespread.

Only about 59% of these big companies chose to outsource their business processes, which is a lot lower compared to IT outsourcing. This difference shows how companies prefer to rely on external providers mainly for their tech needs, leaving other tasks to be handled more internally.

14. 90% of companies see cloud computing as a key driver of their outsourcing efforts

Source: Deloitte

A lot of businesses are pushing to adopt a “cloud-first” approach. This became a thing after the COVID-19 pandemic hit. Companies are beginning to notice the impact of cloud services from cutting costs to making operations smoother.

While there are numerous benefits of switching to the cloud, most are still held back by some challenges. Data security, for example, is one of the biggest concerns.

Businesses worry about how safe their information will be once it’s stored online. The fear of losing control over their data or running into compliance issues are other risks they think about.

15. 83% of IT leaders are considering outsourcing their security efforts

Source: Syntax

Many IT departments are feeling pressured by mixed budget cuts, fewer staff, and a rising number of cyber threats.

As a result, they’re turning to external help for cybersecurity needs. Even though most IT professionals, about 91%, already have their own teams handling security, a significant portion, roughly 83%, are seriously considering outsourcing their security tasks in the near future.

The combination of limited resources and growing threats is pushing companies to look for solutions outside their usual setups. 

16. 3 in 5 organizations turn to outsourcing for app development

Source: Back4App

App development is a specialized field, and developers with the right skills are in high demand. This has led to their deserved high salaries.

For this reason, many businesses see app development as an area worth outsourcing to cut down on costs. The amount of outsourcing depends on the industry.

For example, financial services companies are big on outsourcing app development, with about 72% of them choosing to do so. In healthcare, though, it’s a different story. Only around 31% of healthcare organizations decide to outsource app development.

While app development is critical and expensive, different industries have varying approaches to outsourcing it, depending on their specific needs and priorities. Financial services tend to look outward more than healthcare, where fewer organizations prefer this option.

The differences reflect how each industry weighs the importance of cost-cutting against having more control over the development process.

17. Outsourcing HR saves companies an average of 27.2%

Source: NAPEO

One of the practical ways businesses can cut costs is when they decide to work with Professional Employer Organizations (PEOs) by allowing them (PEO) to handle tasks such as handling human resources, recruiting, and dealing with unemployment claims.

According to a study from NAPEO, these cost savings are quite significant, with an average ROI of around 27.2%. This means that for every dollar a company spends on a PEO, they can expect to see notable savings and even more value back in terms of operational efficiency.

18. Strong problem-solving skills are the most important factor for small businesses choosing an outsourced team

Source: Upcity

For small businesses, the biggest drawback is when hiring outsourced teams in terms of how well they can think outside the box to solve problems. In fact, creativity in tackling business issues ranks higher than things like how many years of experience a team has, the cost of their services, or even their online reviews.

This insight comes from a 2022 survey by Upcity, where problem-solving abilities took the top spot. It shows that businesses are more interested in teams that can come up with smart, new ways to deal with challenges, rather than just relying on tried-and-tested methods or impressive backgrounds.

Even though many might assume that lower costs or positive reviews would matter most, it turns out that being able to address problems creatively is what businesses are looking for. The focus on this ability reflects a shift in what companies value. They are searching for partners who can adapt and innovate, not just follow instructions or offer a cheap service.

19. “Enabling focus on core functions” is the most common perceived benefit among companies that use outsourcing

Source: Deloitte

In a survey conducted by Deloitte, they asked respondents about how their organizations view the advantages of outsourcing. A good number, around 65%, said it allows them to concentrate on their main tasks without getting distracted by other responsibilities.

Another large group, about 63%, pointed out that outsourcing helps them reduce their expenses significantly, which was seen as a major advantage.

20. Over half of freelancers offer skilled services

Source: Upwork

A growing number of skilled workers are choosing to go freelance. Right now, about 51% of people with postgraduate degrees are involved in some type of freelance work. Many of them offer services that require specialized skills.

For example, fields like computer programming, marketing, IT services, and business consulting are popular areas where freelancers are thriving.

Freelancing has become an attractive option for skilled professionals, giving them more flexibility and control over their work schedules. These highly educated individuals find freelance opportunities in specialized fields, allowing them to use their expertise in various projects without being tied down to one employer. 

It’s also worth mentioning that the demand for such services continues to grow, with more companies opting to hire freelancers for short-term or project-based needs. Freelancers are often able to tackle multiple projects at once, broadening their income streams. 

21. Over 1 in 3 small businesses outsource at least one business process

Source: Clutch

In 2019, more than a third of small businesses decided to outsource some of their tasks to external parties. Even more interesting is that more than half of them, about 52%, mentioned that they have plans to outsource at least one part of their business in the coming years. 

22. Small organizations are more likely to outsource payroll services than large organizations

Source: Statista

A small portion of companies with 2,500 or fewer workers, about 15%, choose to completely outsource their payroll tasks. In contrast, much larger organizations with 10,000 or more employees rely less on outsourcing, with only 8% of them handing over payroll duties to an external service. 

23. Nearly 25% of small businesses outsource to boost efficiency

Source: Clutch

Outsourcing is a practical move for small businesses because it helps them make better use of their talent.

According to a survey done by Clutch, almost a quarter (24%) of small business owners said the main reason they chose to outsource was to boost how efficiently things got done. They found that tasks get completed faster and smoother when outsourced.

But that’s not the only reason companies opt for outsourcing. For 18% of the businesses, it was about tapping into more expertise. Flexibility was another big reason for outsourcing, with 16% of businesses pointing to the ability to quickly scale work up or down depending on their needs.

And for 15%, the benefit came from freeing up their employees to focus on other important tasks, allowing them to get more done without burning out or feeling overwhelmed.

24. Accounting and IT services are the most popular outsourced processes for small businesses

Source: Clutch

A little over a third of small businesses, around 37%, choose to outsource both their accounting and IT services. It’s becoming a go-to solution for companies that want to focus on their main tasks and leave the specialized work to experts.

Many small businesses also hand over other parts of their operations to external help, such as digital marketing, which 34% of them do. Development services are outsourced by 28% of small businesses. Human resources is outsourced by 24% of small companies. The same percentage, 24%, also turns to outsourcing for customer support.

25. 7 in 10 British B2B companies outsource key business operations

Source: YouGov

In the UK, IT support is the most frequently outsourced service among B2B companies, with 34% choosing to hand it off to external providers. Not far behind are payroll services, which 28% of these organizations prefer to outsource. Meanwhile, both printing and accounting are tied in popularity, with 24% of businesses opting to rely on external help for these functions. 

Conclusion

Outsourcing remains an evolving industry. The statistics presented in this blog post provide a valuable overview of current trends, benefits, and challenges.

As businesses continue to explore outsourcing opportunities, it’s essential to stay informed and make informed decisions.