Outsourcing statistics for a COVID world

Marcia Da Silva
AUTHOR
Marcia Da Silva
    5 minute read

When the time comes for historians to record the impact of COVID-19 on the global outsourcing industry, they may well turn to the words of Charles Dickens: “It was the best of times; it was the worst of times.” As the pandemic took hold in the first half of 2020 and fear spread as quickly as the virus itself, there was a sense within the outsourcing sector that the worst of times was imminent. Job losses, budget cuts and a patriotic push for businesses to look inward rather than outward had outsourcing providers bracing for clients to scale back on their needs.

Then came the remote working revolution.

Before the pandemic, the 2019 National Compensation Survey found only 7% of civilian workers in the United States had access to a ‘flexible workplace’ benefit. Fast forward to April 2020 and analytics company Gallup was reporting that 70% of U.S. workers worked remotely for all or part of the month. Having once been considered a luxury, remote working was suddenly a necessity and previously sceptical managers were soon wondering why they had left it so long to embrace the concept. Gallup’s finding that more than half of U.S. workers continue to work remotely shows just how much the mindset has changed.

Having taken an early COVID-inspired hit, the outsourcing industry is bouncing back as an increasing number of businesses not only realise that remote working works but appreciate the sector’s potential to reduce costs and improve efficiencies. Having been valued at $92.5 billion in 2019, the global outsourcing market is on a growth trajectory. The IT outsourcing market alone is tipped to be worth $397.6 billion by 2025 and it is a similar story for healthcare, with a MarketsandMarkets report predicting the sector’s global outsourcing market will reach $468.5 billion by 2026, up from $296 billion in 2021.

Overseas outsourcing statistics

Amid such growth, there has never been a better time for companies to educate themselves about the world’s leading and emerging outsourcing destinations and the types of industries, roles and business functions that are making the best use of this incredible resource. The following global outsourcing statistics are just a small window into the power of the sector.

India

With the growing development of technology and more people choosing math-associated studies, India is high on the list of countries in which to outsource. The nation was ranked as the foremost digital nation in Tholon’s 2020 Global Innovation Country Index and offers a wide range of specialists in app development initiatives, blockchain technologies, machine learning, artificial intelligence and open-source projects. About 4 million people are employed in the IT outsourcing industry, each of whom contributes to an incredible $177 billion of outsourcing revenue each year.

Ukraine

A country on the rise in the outsourcing world, Ukraine has more than 1000 agencies providing IT-related services on the back of a huge talent pool of software engineers. IT outsourcing in the country is growing at an average rate of 25% per year, with its location, visa-free travel and favourable tax conditions all proving attractive for foreign investment. The International Association of Outsourcing Professionals included more than 20 Ukrainian IT companies in its 2020 list of the world’s top 100 outsourcing service providers. The momentum does not look like stopping any time soon either, with Entrepreneur.com predicting the country’s estimated 165,000 software developers will increase by up to 125% by 2025.

Jamaica

In a sign of the global growth of outsourcing, the Caribbean nation of Jamaica is one of the many smaller players determined to establish a stronger foothold in the sector. With more than 60 BPO companies employing about 36,000 people, the country is traditionally associated with the BPO sector but it is now promoting itself as an option for software outsourcing. The provision of online digital services, IT-enabled services and call centre functions remains its strength and as recently as August 2021, the Jamaica Promotions Corporation declared the country was set to “take a lot” of the 50,000 BPO jobs tipped to move from Asia to nearshore destinations.

Spotlight On – The Philippines

While something of a late bloomer in the outsourcing space, the Philippines has soared to become widely known as ‘The BPO Capital of the World’. This is largely due to Government investment in the sector, with IT-BPO identified as a priority sector under the Philippine Development Plan 2017-22 due to its job-generating capabilities.

With historic ties to Spain and the U.S., the country’s strong cultural compatibility with Western nations makes it an ideal hub for outsourced customer service roles such as call centres and IT support. This is seen in the fact $50 billion worth of annual revenue flows from the local IT-BPO industry and the Philippines accounts for up to 15% of the sector’s global market share.

While a slowdown in Western consumer activity may have a negative impact in the short-term, the Philippines’ BPO sector is ideally placed to benefit from the next wave of global expansion in the outsourcing industry. In 2016, the IT and Business Process Association of the Philippines (IBPAP) unveiled its Roadmap 2022 to prepare members for a transition towards automated services and more technical and creative jobs. That foresight means there has been targeted investment in technology and upskilling, with IBPAP forecasts that close to 75% of the BPO workforce will be mid- to high-skilled positions by next year, compared to little more than 50% in 2016.

Prior to COVID-19, the Philippines had also established itself as a leading outsourcing destination for healthcare service delivery. Revenue growth in the health segment was already forecast to climb by up to 10.8% from 2019 to 2022 and the pandemic-inspired demand for healthcare services means that rise is now anticipated to be even higher. Such projections are yet another positive for an ever-resilient outsourcing industry that refuses to accept that a COVID world is the worst of times.

As these statistics show, outsourcing is an industry on the rise. More and more businesses are embracing the benefits that come with no longer being restrained by the boundaries of operating within a traditional office and to assist your own transition to the world of remote working, explore 10 simple steps for managing remote employees.

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