As businesses continue to grow, competition increasing and it becomes more difficult to come up with a strategy to get ahead of the game. Company owners are more and more likely to turn to outsource to keep their competitive edge.
Outsourcing is the ideal way for you to find extremely well-qualified talent without paying extortionate rates and without sacrificing quality. As with any business strategy, you will need to research the best solutions for you but the information below will definitely help you get started.
Small businesses that outsource
Over 33% of small businesses already outsource a business process. 52% are planning to outsource in 2019. Many feel the outsourcing process but it’s surprising how many choose this option.
Outsourcing is a sound way for small businesses to increase efficiency. You will find that as you grow, it’s often difficult to find the staff in time to keep up with the new demand. By outsourcing, a company also has access to a large talent pool, making it easier to find qualified experts.
Tasks that are frequently outsourced by small businesses include accounting, digital marketing, IT, and/or advertising.
In 2018, global outsourcing reached $85.6 billion
Despite this being less than the $104.6 billion of 2016, there is still a large amount of money being spent on and invested in the outsourcing market. This demonstrates an increase in businesses choosing to outsource to agencies, remote teams, and/or freelancers.
With a market value of nearly $86 million, it’s safe to say that the industry is thriving with an array of options available to you. There will be a skilled outsourcer to fulfill your needs regardless of the size of your business.
Businesses with less than 50 employees are less likely to outsource
In fact, those with 50 employees or less are 29% less likely to outsource, whereas those with over 50 employees are 66% more likely to outsource.
Perhaps this is due to the fact that companies of this size are unable to aren’t able to justify paying for an outsourcing provider. However, a first step would be to hire a freelancer. If you can work it into your budget, you will be able to find a massive range of abilities.
Your location influences whether to outsource or not
Businesses in the US are more inclined to outsource than any other country. 84.2% of outsourcing deals came from the US. This is probably because rates outside the US are much cheaper. The UK came in significantly lower at 5.2%, with Spain and Australia also more likely to outsource.
Going back to the States, there is also quite a strong feeling against outsourcing. 71% believe it harms the US economy and Bloomberg Businessweek noticed that 62% of Americans asked the government to actually stop businesses from taking jobs from overseas.
It would seem that those in the US have a difficult decision between enjoying lower rates and helping the country’s economy.
Top reasons to outsource
Thanks to Deloitte, we can get an idea of the top reasons why companies choose to outsource:
59%- to reduce costs or have more control over them
57%- to allow for more focus on core functions
47%- to solve capacity issues
31%- to improve the service they provide
28%- to take advantage of expert talent
17%- to manage the business environment
17%- to speed up organizational transformation
What to outsource and what not to outsource
Outsourcing jobs can range from software development to marketing. That being said, 60% of the total outsourcing market is made up of IT workers, including:
- Customer support
- Data Centre operations
- Database admin
- Disaster recovery
- Mobile app development and maintenance
- Network operations
- System support
- Web hosting and operations
Revenues from the ITO industry made up $62 billion in 2018.
On the other hand, there are certain areas that companies do not like to outsource. 89% of companies won’t outsource strategic planning. (0% of companies won’t outsource sales or marketing positions. Basically, the plan has to be developed in-house, but then the task can be outsourced.
Outsourcing to Eastern Europe vs India
You will typically here of Central and Eastern European countries for IT outsourcing, particularly Ukraine. But if you want to look at the outsourcing industry as a whole, India is number one for cost.
If your needs are related to software development then it makes total sense to look at Ukraine. However, look at individual countries to see their outsourcing specialties.
$100 billion of revenue from outsourced deals comes from the defense sector.
While you are making your outsourcing decisions, you might want to bear in mind the value of certain industries. While the defense sector comes in at the top, there are still others worth mentioning:
- $75 billion- government sector
- $52 billion- insurance sector
- Healthcare grew by 36%, human resources by 32%, and the finance sector increased to 30%.
If your activity doesn’t fit into one of these industries, it certainly doesn’t mean that outsourcing isn’t for you.
The effects of advanced technology and automation
Generally speaking, we are all excited by the advancement of technology. AI, machine learning, and business intelligence have reduced the number of monotonous tasks we humans have to carry out. Businesses can be run more efficiently with lower costs, but there is a downside.
1 million outsourced jobs across the US, India, Poland, and the Philippines could be lost as a result of advanced technology. It is predicted that 4 jobs will be lost per automation management job created.
It might not be so bad though. While modern technology advances, it might be a case of developers adapting and learning new skills to fit the modern market.
If you choose to outsource, you choose to save time and money. Overall, outsourcing is a positive experience, however, you will need to ensure you have a method in place to monitor the employee activity from remote locations.