Top 10 offshore outsourcing statistics
Offshore outsourcing is one of the most effective strategies used by various software development firms to stay ahead in the competitive digital world. It enables them to find top talent from all over the world. Hiring professional developers from other countries benefits them by saving them a lot of money while simultaneously getting quality work done.
Thus, choosing this strategy allows you to check off the boxes for increased efficiency and cost savings. Understanding offshore outsourcing statistics will help you choose the right path and learn that there is more to the IT industry than meets the eye. Take your time to explore the listed statistics in the article, use them as a guide and consult the experts if necessary before making a choice.
- 59% of companies outsource to cut costs
- Global outsourcing market in 2019 accounted for $92.5 billion
- Global outsourcing tops India
- Outsourcing is expected to increase by 65%
- Over 37% of small businesses outsource some of their business processes
- 60% of businesses outsource app development
- Automation puts over a million outsourced jobs at risk
- 93% of businesses have embraced cloud services to maximise outsourcing
- 71% of Americans believe that outsourcing harms the US economy
- 92% of G2000 companies use IT outsourcing
1. 59% of companies outsource to cut costs
Running software development firms is not easy nowadays, and it is expensive. So there is no other perfect way to reduce that cost than by moving some of the work to people from other, cheaper parts of the world. As mentioned earlier, most organisations choose offshore outsourcing to cut costs. It is considered a way to reduce the weight on their budgets for hiring in-house staff, their salary, operational expenses, and many others.
2. The global outsourcing market in 2019 accounted for $92.5 billion
In 2019, outsourcing statistics show that the value of global outsourcing services had reached $92.5 billion. The market showed growth of over 8% as compared to 2018. However, the value of global outsourcing services still falls well short of the $104.6 billion record set in 2014. The IT outsourcing market is expected to spend around $1.3 trillion by the end of 2023 as companies adapt to digital transformation.
3. Global outsourcing tops India
Out of the many offshore outsourcing destinations listed, India is the most popular and preferred country for software development outsourcing. Because of its abundance of talented people, highly qualified professionals, and technocrats, the nation is referred to as the “Outsourcing Capital of the World.” Much of the Indian software development industry is concentrated in the cities of Bangalore, Mumbai, and Delhi.
4. Outsourcing is expected to increase by 65%
Knowing the benefits of offshore outsourcing from their experiences, the majority of organisations in the IT business plan to continue offshoring their software development projects. Since the pandemic, many businesses have planned to increase their outsourcing, with a focus on locating skill sets that they do not have in-house.
According to the statistics, it is about to increase by about 65%. This is expected to continue in the future, as the benefits of offshore outsourcing are too great to ignore. Companies are increasingly realising the potential cost savings and improved efficiency that can be achieved with offshoring. Only 35% of companies don’t plan to expand on it.
5. Over 37% of small businesses outsource some of their business processes
Small businesses normally outsource some of their business processes. Over 37% of small businesses do it, according to a 2019 study. It also claims that 52% of survey participants intend to outsource a business process in the near future. These figures suggest that outsourcing has become increasingly popular among small businesses. In the future, this trend is probably going to continue.
6. 60% of businesses outsource app development
As you know, many organisations depend on their offshore outsourcing partners for application development. Due to the high demand and high salary of specialised app developers, companies are forced to turn to foreign partners that can provide app development services at a lower cost. And these rates vary across various industries. In the financial services industry, 72% of organisations outsource app development. In healthcare, that figure falls to 31%.
7. Automation puts over a million outsourced jobs at risk
In recent years, statistics say that all the jobs that were previously outsourced or that required low skills are now at risk of automation. The development of technology has caused a transformation in the industry. Automation, artificial intelligence, and cloud computing have all led to process updates. It is said to eliminate about a million jobs in countries like the US, Poland, India, and the Philippines over the next five years.
8. 93% of businesses have embraced cloud services to maximise outsourcing
93% of organisations have either implemented cloud-based solutions or are considering doing so in order to optimise their outsourcing efforts. Although there are risks associated with these solutions, particularly with regard to protecting sensitive data, they might aid in coordination and control. That is why security ranks as the top concern for 68% of these organisations.
9. 71% of Americans believe that outsourcing harms the US economy
Even though companies all over the world benefit from outsourcing, the majority of Americans believe that it is bad for the economy. 62% of Americans favour a complete government ban on it, while 71% of Americans believe it has a negative impact.
10. 92% of G2000 companies use IT outsourcing
Out of ten, nine of the top 2000 global companies outsourced their projects to other countries in 2019. This means about 92% of them used IT outsourcing earlier, and now it is bound to increase in number. IT outsourcing was much more popular than the outsourcing of business processes, with only 59% of G2000 companies having a contract.
As evidenced by the statistics mentioned above, many businesses of all sizes and across all industries use outsourcing around the world. Every year, a large number of companies outsource to other companies for hundreds of billions of dollars to handle portions of their workflows. Therefore, many jobs in developed countries are moved offshore, which in turn gives developing nations an economic boost.
The author: Sascha Thattil works at Software-Developer-India.com which is a part of the YUHIRO Group. YUHIRO is a German-Indian enterprise which provides programmers to IT companies, agencies and IT department.