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What story does outsourcing statistics tell us?

Outsourcing has become an inseparable part of the world economy. It allows businesses to grow when they face the challenges of scarcity, lack of production inputs and human capital. In order to better understand this economic phenomenon and its importance, we turn to recent data and outsourcing statistics.

So why outsource? Quoting Kamala Ismayilova and her post “IT Outsourcing: key points and statistics for 2015” – it makes it possible for a firm to improve its in-house capabilities without committing to any long-term arrangements or risky and large investments in capital. Furthermore outsourcing helps to cut costs and can be a mechanism to improve operational flexibility. It reduces the overheads for the management and adds extra capabilities to the portfolio of your company.

Global outsourcing statistics - services
Image Reference – Kamala Ismayilova

The unstoppable IT sector

At the same time the Information Technology industry has become one of the leading engines of the world economy. It has given birth to some of the most powerful multinational corporations to date. In addition it is becoming more costly to hire the needed staff and form good teams. This in turn leads to an increase in expenses and challenges in managing and handling human resources. IT departments become an expensive undertaking and managers have to take important steps in improving productivity and reducing costs. According to statistics the expectation is for the IT market to increase from $3.7 trillion to $3.8 trillion in 2016.

What do the outsourcing statistics say?

Recent outsourcing statistics show the upward trend in the industry is still present and prospects are more than positive. In his article about outsourcing statistics Merlin says 1.92% of outsourcing done by IT firms relates to disaster recovery claims. Most of them report that costs associate with outsourcing are the same as or lower than compared to in-house functionalities. Furthermore, from the companies that outsource application hosting, about 2.65% plan to increase their outsourcing activities in the near future and hence their capacities.

IT in healthcare is also an important part of the outsourcing activities. Experts forecast the sector will exhibit growth until 2018 “with a CAGR of 7.6%”. It is interesting to note that according to outsourcing statistical data, large companies are still the leaders and will continue to be so this year. On average they spend 7.8% of their budget on outsourcing, compared to 6.7% and 3.7% respectively for midsize and small firms. Help desk and e-commerce are the top sectors that IT organizations outsource and they continue to move large chunks of these divisions to external companies and other countries.

In terms of destinations the numbers are also interesting. In the recent decade countries like Bulgaria, Romania, and Poland have become viable competitors to the already established outsourcing leaders in Asia. Although India and China are still the most popular, the Eastern European countries have entered the top outsourcing charts. For example the export of software services in Romania has increased by 27 percent in 2013 relative to 2012.

We can definitely see the outsourcing market is growing.  Let us know what you think about the statistics in the comments below. You can also read about recent trends and changes in the outsourcing industry as well as the benefits of outsourcing to Eastern Europe.

Author: Galin Kutev

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