Outsourcing can be a significant source of budget-friendly qualified labor. But for potential employees, it often means having to work hard to sharpen up on core competencies and remain competitive.
But as a modern gentleman, you’re better off being in the know no matter where you stand. That’s why we’ve put together some of the most crucial outsourcing statistics to help you out.
So put on your thinking cap, and let’s get right into it.
Top Ten Key Outsourcing Statistics for 2022
- 24% of small businesses that outsource at least some of their functions do so to increase efficiency.
- Statistics on outsourcing suggest that outsourcing industry’s total value is estimated to hit $405.6 billion by 2027.
- Outsourcing helps companies reduce costs by about 15% on average.
- Based on the Nike outsourcing facts, Nike outsources over a million jobs globally.
- Business process outsourcing is expected to produce almost $113 billion of revenue in the US in 2021.
- 60% of HR outsourcing companies count fewer than 30 full-time employees.
- The global value of outsourced operations during 2019 was $92.5 billion.
- Outsourcing statistics show that 80% of Americans say outsourcing has been detrimental to American workers.
- Call center rates in Southeast Asia and South America run between $8 and $18 an hour per representative.
- Australian businesses employ around 242,000 people in outsourced positions.
Small Business Outsourcing – Basic Stats and Facts
First thing’s first — we need to see into what is considered outsourcing, how many people do it and what are the pros and cons of this type of arrangement.
1. Small business outsourcing statistics indicate that over a third of small businesses in the US outsource different functions.
(SBA)
Outsourcing is an increasingly popular way for small businesses to gain more overhead cost control. According to recent numbers, the most commonly outsourced operations are accounting, marketing, and sales.
2. 60% of HR outsourcing companies count fewer than 30 full-time employees, as per HR outsourcing statistics.
(ExtensisHR)
Although HR outsourcing companies are still relatively small businesses, they are, in fact, hiring more staff.
Recent HR outsourcing statistics show it’s the function with the most growth in the industry. Roughly 31% of them have over 5,000 employees, 10% of which include companies with over 20,000 employees.
3. 24% of small businesses that outsource at least some of their functions do so to increase efficiency.
(Clutch)
Entrepreneurs and small business owners have a lot to gain from outsourcing. Commonly outsourced small business tasks include IT services, accounting, and digital marketing.
Data on small business outsourcing also shows that HR is becoming one of the most outsourced services. Additionally, 52% of small businesses surveyed in 2019 said they planned to start outsourcing at least part of their operations.
4. Statistics on outsourcing suggest that outsourcing industry’s total value is estimated to hit $405.6 billion by 2027.
(Grand View Research)
The future direction of outsourcing facts and figures is mainly predicted with strong optimism. Grand View Research expects a compounded annual growth rate of 8% in the period between 2020 and 2027.
5. Based on the Nike outsourcing facts, Nike outsources over a million jobs globally.
(HBS Digital Initiative)
In 2017, Nike had 1.02 million employees in 42 countries. Furthermore, 44% of Nike’s production outsourcing went to Vietnam, and the nearest second was China, at 29%.
6. Business process outsourcing is expected to produce almost $113 billion of revenue in the US in 2021.
(Statista)
Despite the circumstances in 2020, outsourcing statistics for 2021 remain optimistic. Experts predict a CAGR of 5.6% from 2021–2025. At the end of this period, the market value is forecasted to hit $140.649 billion.
7. The global value of outsourced operations during 2019 was $92.5 billion.
(Statista)
Although outsourcing has indeed hit a couple of rough patches over the years, it’s headed in a decidedly upward direction. Outsourcing statistics by year indicate 2016 was the lowest point in the ten years leading up to it, with a global value of almost $77 billion.
Most of the revenue came from outsourcing contracts originating in the Americas. Europe was a close second, followed by the Middle East and Africa. Contracts from the Asia-Pacific contributed far less in comparison.
8. Information technology outsource is so common that, in 2019, that market reached $66.52 billion.
(Statista)
That represents a sizable chunk of the $92.5 billion spent on outsourcing overall in the same year. So, we can safely say IT outsourcing statistics show it’s one of the industries most affected by outsourcing business processes. The total value of outsourced contracts in IT peaked in 2000, with over $76 billion invested in IT outsourcing.
US Outsourcing Statistics
Now that we covered the basics, let’s be a bit more specific. America is the world’s economic giant, and outsourcing is quite prevalent, but that doesn’t come without consequences. Here are some surprising, but informative facts on jobs Americans outsource.
9. The number of jobs lost to outsourcing, as statistics indicate, reached 5 million from 1998 to 2018, causing a significant net loss of manufacturing plants in the US.
(Economic Policy Institute)
The number of manufacturing sector jobs lost to outsourcing involves around 91,000 manufacturing plants. This of course, caused a significant shift in all related American economies.
10. Outsourcing statistics show that 80% of Americans say outsourcing has been detrimental to American workers.
(AEI)
Four out of five Americans think outsourcing is bad for the country’s workers. Only 15% of the same poll respondents say outsourcing had helped American workers and the economy overall.
11. According to United States outsourcing statistics, as many as 3.7 million jobs have been outsourced to China alone.
(CNBC)
Whether you think it’s fair or not, there’s no question that the US is losing manufacturing jobs to China at a drastic rate. Over 1.7 million jobs have been exported to China since 2008.
12. Domestic outsourcing has contributed to long-term wage losses of 2–3% over a span of nine years, according to Bureau of Labor statistics on outsourcing.
(BLS)
Domestic outsourcing (that is to say, outsourcing business processes within the same country) drives down wages in the US. Interestingly, the same phenomenon in Germany has a much more pronounced impact. There, experts estimate domestic outsourcing leads to wage losses of up to 10%.
13. Outsourcing statistics indicate 202,543 jobs in the US were listed as “offshored” up until 2020.
(Public Citizen) (Observer)
Many highly developed nations are losing jobs to overseas workers at exorbitant rates. The fashion industry is among the worst offenders. Until a few decades ago, 95% of the clothes sold in the US were made domestically. However, that number dropped to 3% by 2015.
14. 68% of major CPG companies in the US outsource part of their business processes.
(Reliable Plant)
According to a report by PricewaterhouseCoopers, the consumer products industry is one of the most susceptible to outsourcing.
One of the most commonly cited reasons for outsourcing in the sector is its rising energy costs. 65% of the surveyed US companies’ executives see energy costs as a significant hurdle.
Job Outsourcing Statistics from Around the World
How common is outsourcing in other parts of the world? Which countries outsource the most? Here is what the numbers have to say about this.
15. Accenture employs over 500,000 people worldwide, making it the largest international outsourcing business process provider.
(Running Remote)
Accenture provides a wide range of professional services in the IT sector, as well as services for numerous Fortune 100 companies.
Cognizant is a close second, offering AI and cloud solutions, among other services, to several global corporations.
16. Australian businesses employ around 242,000 people in outsourced positions.
(IBISWorld)
In Australia, outsourcing is a way to reduce operating expenses, much like in other countries. However, outsourcing statistics in Australia show it also fills the vital role of expanding an otherwise shorthanded workforce. Over 36,500 businesses outsource at least some of their business functions in Australia.
17. China’s BPO revenue is expected to grow to $17.77 billion in 2021.
(Statista)
China remains one of the most popular outsourcing destinations. With a predicted CAGR of 12.6% in the next five years, China’s BPO market volume will reach $28.5 billion by 2025 if the estimates are correct.
18. Business process outsourcing makes up 9% of the Philippines’ total GDP, according to the recent outsourcing jobs facts.
(Matchboard)
The Philippines relies on inbound outsourcing more than any other country. Its total value reaches roughly $27 billion, with call centers representing the most significant contributor to outsourced labor.
Outsourcing facts show the government is a staunch supporter of the Philippines’ industry, providing everything from financial incentives to education grants for outsourced labor providers.
19. Call center rates in Southeast Asia and South America run between $8 and $18 an hour per representative.
(CloudTask)
Outsourcing a call center, statistics show, dramatically reduces customer service costs. The same call center representatives would cost between $25 and $65 per hour on average in the US.
20. Outsourcing helps companies reduce costs by about 15% on average.
(ISO)
In studies on individual business processes, the savings were even more remarkable. Research by Datamark Incorporated indicated savings of up to 31% in a single-year analysis. The same business saved 33% through outsourcing over a period of three years.
21. Stats on outsourcing show 59% of companies state cost reduction as the primary reason for outsourcing.
(Intetics)
Cost optimization has been and continues to be the main driving force of outsourcing. However, it’s beginning to give way to other benefits in recent years. Focusing on core business activities comes in at a close second, with 57% of companies citing it as the main reason to outsource.
22. 80% of companies that outsource also do it to boost business performance.
(Efficio Consulting)
Research conducted by Duke University and IAOP listed cost reduction as only one of the many benefits employers seek from outsourcing. Outsourcing is also an essential driver of strategic growth and organizational efficiency.
23. 66% of companies with more than 50 employees have engaged in domestic or international outsourcing.
(Time Doctor)
On the other hand, only 29% of companies with fewer than 50 employees are likely to do the same. As companies grow in size, the benefits of outsourcing become more apparent since an in-house team that covers all functions becomes less viable.
FAQ
How common is outsourcing?
Around 30% of companies in the US outsource at least part of their business. Outsourcing is quite common across most industries but most prevalent in the IT sector, where 94% of organizations adopt some form of outsourcing.
In terms of traditional outsourcing, 68% of US consumer product companies outsource some of their operations. Manufacturing companies outsource as much as 70–80% of their finished products.
(Fundera) (Reliable Plant)
What percentage of American jobs are outsourced?
It’s difficult to produce a precise percentage because many types of outsourcing exist. However, data from the Department of Commerce shows that American multinationals have reduced their domestic workforce by 2.9 million between 2000 and 2018. In the same period, those companies employed over 2.4 million people overseas.
(AMU Edge)
Which countries outsource the most?
Countries in the Americas, led by the United States, are the biggest outsourcers. The outsourcing market in those regions reached $62 billion.
The US is also home to the five largest originators of outsourcing contracts in the world. Apple, Nike, and IBM are familiar names on the list of top outsourcers. Let’s also not forget Walmart, since outsourcing statistics place it in the top five. Walmart carries out the lion’s share of its manufacturing in China.
(ITI Manufacturing) (Statista)
How big is the outsourcing industry?
In 2019, the industry reached $92.5 billion globally. However, these numbers can differ drastically depending on the source, but also the year. For instance, a 2018 report by BrandEssence Research valued the BPO market at just under $188 billion that year.
The discrepancies stem from the lack of a general agreement of what constitutes outsourcing, how it’s valued, and what economic factors the researchers consider.
(BrandEssence Research) (Statista)
Why is outsourcing bad?
Experts often talk about outsourcing and unemployment statistics in the same context. And it’s true that outsourcing essentially drains jobs from the originating country and exports them to a host country. That job loss is what most people understand to be the most significant negative aspect of outsourcing. Domestic outsourcing also has some drawbacks.
The most salient of these is that it increases wage inequality and depresses wages in the outsourced tasks.
(DOL) (Investopedia)
Conclusion
As long as capital can move freely while people’s movement is restricted, labor arbitrage will continue to be a popular way to optimize costs and improve performance.
These outsourcing statistics are proof that the days of self-contained in-house organizations are long gone. And they’re not likely to return ever again.
But proponents of outsourcing are convinced the long-term benefits across all dimensions will eventually be apparent. Until then, remember the words of the legendary Peter Drucker:
“Do what you do best and outsource the rest.”
Sources:
- AEI
- BLS
- Brand Essence Research
- CloudTask
- Clutch
- CNBC
- DOL
- Efficio Consulting
- ExtensisHR
- Fundera
- Grand View Research
- HBS Digital Initiative
- IBISWorld
- Intetics
- In Homeland Security
- Investopedia
- ISO
- ITI Manufacturing
- Matchboard
- Observer
- Public Citizen
- Reliable Plant
- Running Remote
- SBA
- Statista
- Statista
- Statista
- Statista
