The importance of outsourcing can’t be denied. By now, numerous research studies have been published, and they yield some pretty fantastic outsourcing statistics.
We’ve compiled the most useful and interesting information so that you can see how common and vital outsourcing truly is. You will see how this industry behaves and what we can expect in the future.
This article could benefit business owners, especially those who already outsource tasks or just consider outsourcing them at the moment.
Let’s dive in and highlight everything you need to know about this industry in the US.
The Most Important US Outsourcing Statistics (Editor’s Choice)
- 30% of US companies outsource.
- 64% of outsourced services are related to software application development.
- 57% of companies outsourced work to increase productivity.
- Employers could save around 60% of costs with outsourcing.
- This year, over 37,000 jobs were lost in three months due to outsourcing.
- Over 14 million jobs are outsourced from the US.
- 93% of companies already have a multi-cloud strategy.
- According to 71% of Americans, outsourcing harms the US economy.
Outsourcing Statistics 2020 — The Latest Information
One of the main perks of analyzing statistics is figuring out the latest trends in any industry sector. With such information, you can see what areas of remote work are going to grow in demand. The outsourcing market is no exception to this rule.
In this section, you will find more about key trends that will affect both the global and the US outsourcing market in 2020 and beyond.
1. Over 80% of logistic leaders plan to increase their outsourcing budget by at least 5%.
These United States outsourcing statistics show us that many US companies are willing to invest more in outsourcing as a viable workforce solution. Accordingly, the rate of sending jobs overseas will most likely continue to grow, and not just in the logistic industry.
2. 70% of transactions in the outsourcing market are digital-focused in 2020.
The majority of outsourcing market transactions are digital-focused, while only around 30% are pure traditional services. Various statistics on outsourcing show that this number hasn’t changed since the fourth quarter of 2019. In the third quarter of 2019, 66% of transactions were digital-focused.
3. 30% of US companies outsource a part of their business.
Although only 30% of companies in the US outsource some part of their business, the number of outsourcing companies is likely to increase in the future due to the changing industry standards.
4. World-class HR companies have 32% fewer staff than other HR organizations as a group.
The latest HR outsourcing statistics show that the newest HR trends are about selective, more effective outsourcing areas (including talent acquisition, employee relations, and similar).
This includes employing fewer transactional employees and staff who work on employees’ life-cycle activities, which is possible thanks to outsourcing those duties.
5. The most commonly outsourced IT service is software application development (64%).
Application development and maintenance are the two most commonly outsourced services. According to Statista’s list, 51% of outsourced jobs are connected to software application development as of 2017.
6. Nearly 90% of survey respondents believe both providers and buyers will be focused on value and outcomes.
Both big and small business outsourcing statistics indicate that the value and quality of outsourced goods and services are the top priorities in 2020.
Also, 69% of respondents presume that outsourcing providers will work as systems integrators, which means that clients will share the risk with providers.
7. The global hospital outsourcing market is expected to expand with a CAGR of 10.4% by 2027.
(Grand View Research)
The worldwide hospital outsourcing market size was $270.9 billion last year. Thanks to technological advancement and AI, hospital outsourcing trends are changing, and outsourcing is becoming more reliable.
Some of the most commonly outsourced jobs include medical billing and IT services due to the budget constraints and lack of expertise in those fields.
8. The worldwide LPO market size is expected to reach $40 billion by 2024.
The legal process outsourcing market size is expected to rise with a CAGR of 35% by 2024. If we take into consideration that this market size was $3 billion in 2016, we will realize how high this increase will be.
Newer legal process outsourcing trends include uncovering the background information before entering into an agreement, and that’s possible because of AI.
9. Automation is a significant threat to more than 1 million jobs outsourced in the Philippines, India, the US, and Poland.
Thanks to automation, companies can drastically reduce their costs. However, some jobs, like AI, won’t be automated in the near future. Job seekers should always consider upgrading their skills so they can be prepared for what the future holds.
Outsourcing Statistics — Why Companies Outsource
There are many reasons companies decide to utilize outsourcing in their business operations. By examining and comparing data, we were able to identify why companies from the US choose this option. Let’s see what some of these reasons are.
10. 59% of companies outsourced work to reduce costs.
Companies in developed countries could reduce costs by a staggering 59% if they decided to outsource work to a less developed country and its workforce.
Stats on outsourcing confirm this information, and we see many companies utilizing this opportunity. This is true for both digital and retail businesses, as both can reap the benefits of outsourcing.
11. 57% of companies outsourced work to focus more on the core functions.
Another excellent reason for outsourcing work is reducing the load of time-consuming tasks. After outsourcing the majority of tedious tasks to remote work employees, the full-time workforce’s effectiveness and efficiency will be vastly improved. It is one of the outsourcing trends that has a significant impact on modern companies’ operations.
12. 47% of companies outsource due to solving capacity issues.
(Your Team in India)
When it comes to capacity management, many US companies use outsourcing strategies to cope with occasional issues. Every company has its growing pains, and no matter how well prepared for rapid growth, the company will experience capacity issues at some point.
Also, one of the outsourcing facts tells us that 47% of US companies that experienced capacity management issues resorted to outsourcing as a solution.
13. 34% of companies outsourced in order to get access to a broader IT talent pool.
One of the main perks of having remote workers is getting access to a global pool of talent because client companies can choose among experts from all around the world and pay them considerably less.
If we consider the outsourcing data that proves its importance, it’s easy to see why more and more companies are opting to hire workers overseas.
14. A business owner could save around 60% of overall costs with outsourcing.
A business owner has multiple costs when hiring an employee from the US, including recruiting, office space, equipment, training, medicare, benefits, retirement plan, paid holidays and sick days, employee turnover, and the like.
According to the US government outsourcing statistics from 2019, outsourcing increases the US GPP and overall wealth, allows American citizens to advance in their careers, and is an appropriate resource allocation.
15. Outsourcing can increase productivity by 10 to 100 times.
Outsourcing can also be beneficial to the company’s employees. When challenging, time-consuming, or excessive administrative tasks are outsourced, employees can focus on their core responsibilities and be more efficient at work.
16. One of the most significant benefits of business process outsourcing is saving up to 70%.
The current business process outsourcing trends leverage lower global salaries. Simultaneously, some other benefits of BPO are access to the bigger employment talent pool, increased trade opportunities, reduced local labor, global presence, flexible workforce, and others.
17. 78% of client companies feel positive about their outsourcing relationships.
Outsourcing bears many risks and isn’t compatible with all business models. It’s difficult to trust other companies at first. However, the companies that outsource jobs usually have good relationships with the organizations they work with.
Job Outsourcing Statistics — How Outsourcing Affects the Economy
There has been an ongoing debate about the benefits and downfalls of outsourcing. At the moment, there is no definite answer to this dilemma. There is the fact that a lot of US jobs are carried out by outsourced workers.
This may affect the status a company has and raise concerns among customers about the quality of work. However, this isn’t the only drawback of outsourcing.
18. More than 37,000 jobs were lost due to outsourcing from March to July 2020.
Jobs lost to outsourcing statistics show that outsourcing has some bad sides as well. This is troubling many US citizens and the main reason some people strongly object to outsourcing jobs outside the country.
However, the state of the matter shows us that, even though they might disapprove of outsourcing, the vast majority of companies still use it.
19. The top 10 US companies outsource more than 200,000 jobs in total.
(Love to Know)
The number of jobs outsourced continues to grow, and 10 companies are the most responsible for that. These include IBM, EDS, Dell, Cognizant, Siemens, General Electric, Convergys, Accenture, Computer Sciences Corp, and Intel.
It is only natural that they will continue with this practice because of the benefits they get from outsourcing work to remote workers. Even though it could be potentially dangerous for the economy, outsourcing is here to stay.
20. More than 14 million jobs are outsourced from the US.
Jobs moving overseas statistics point out that outsourcing is a big part of the business. However, given that around 5.8 million Americans were unemployed in December 2019, we see that it has certain negative effects on the US workforce.
21. 41.5% of all outsourced work came from the US.
The US was the largest outsourcer of work globally, with 41.5% of the market share. The actual percentage of US-outsourced work on the global market is steadily going up.
Other Relevant US Outsourcing Statistics
One of the key benefits we can gain from observing trends in outsourcing is determining what industry sectors are currently in demand and what are gaining traction. This can provide benefits to both companies and remote workers, as they’ll be able to keep track of the relevant market easily.
22. 93% of companies already have a multi-cloud strategy.
While we can’t predict the future, one of the main IT outsourcing trends is certainly related to cloud solutions. Many companies already use a multi-cloud strategy, and it has already become a must for almost every new company.
23. Walmart has invested $10 million in moving a part of its manufacturing jobs back to the US.
Walmart is one of the top five US companies that send jobs overseas. Even though it puts effort into giving some of its manufacturing jobs back to the US employees, one of the most significant Walmart outsourcing facts is that it still collaborates with around ten thousand manufacturing plants in China.
24. IT spending is predicted to reach $3.9 trillion this year.
Investment in the software will surpass everything else in the enterprise realm this year. Therefore, it’s no wonder that IT services are outsourced the most.
26. 71% of Americans think outsourcing harms the US economy.
(Compare Camp) (The Balance)
Americans are dissatisfied because companies hire employees from other countries. Outsourcing decreases the employment rate and contributes to a great number of underpaid workers in the US.
Outsourcing Statistics — Wrap Up
After carefully considering all the stats we compiled, it’s crystal clear that the outsourcing market will continue to grow. The actual effects of US job growth are yet to be seen, given that outsourcing decreases the unemployment rate.
Moreover, technology development has made outsourcing much easier. It’s hard to tell whether sending jobs overseas has more pros or cons, but companies undoubtedly gain more profit because of it.
Regarding jobs sent overseas statistics, India is currently one of the leading countries in outsourcing, but we’ll see the upcoming changes in this industry.
Frequently Asked Questions (FAQ)
What percentage of US companies outsource?
Around 30% of US companies outsource a part of their business. However, the outsourcing rate depends on the company.
For example, US IT companies outsource the majority of their goods and services, but manufacturing companies outsource from 70% to 80% of their finished products.
Even healthcare and legal industries outsource jobs, and 68% of consumer product companies use outsourcing. The US is one of the countries that outsource jobs the most, but outsourcing rates depend on many factors, such as the industry.
Is outsourcing increasing or decreasing?
When all statistics are taken into consideration, we can say that outsourcing will continue to grow in the future.
Around 80% of logistic leaders plan to increase their outsourcing budget by 5%. The global LPO market size is expected to reach $40 billion by 2024, and it was only $6 billion in 2016. The worldwide hospital outsourcing market size is expected to increase with a (CAGR) of 10.4% by 2027.
These are just some of the statistics that can help us have a clear insight into the outsourcing rates.
What countries outsource the most?
India is undoubtedly the leading country in outsourcing. Indian workforce is cheaper than in the other parts of the world, and it’s possible to find inexpensive but quality employees.
Some other countries are the Philippines (it’s important to highlight that most Indians and Filipinos speak English), Mexico, Argentina (it’s in the same time-zone as some of the US states, which is beneficial), Ukraine, and Poland (known for the outstanding software developers).
All these countries have many experienced and skilled workers who cost less than an American employee.
Why is outsourcing so popular now?
There are numerous business benefits of outsourcing. Firstly, outsourcing can help companies save much more money (for example, they can find a talented workforce overseas to do the job without having additional expenses), helps employees stay focused on the core tasks, increases productivity, and so on.
It’s important to mention that technological advancement enables companies to outsource jobs reliably and efficiently, contributing to outsourcing popularity. Even if many people think outsourcing is bad for the economy, outsourcing statistics show that companies will continue to do so.