As a business leader, studying the current outsourcing trends will help you navigate the outsourcing terrain and adapt to the new normal of the post-pandemic world.
The outsourcing trends 2021 reflect the changes the pandemic brought to the outsourcing market this year. It suggests that businesses will need to look for providers with quality services, aim for high flexibility, and leverage updated technology while outsourcing in 2022.
In this article, we’ll discuss the most important outsourcing trends of 2021 that you should watch out for in 2022. We’ll also look at the most outsourced services of the year.
This Article Includes:
(Click on a link to go to a particular section)
- Outsourcing Trends 2021: 13 Key Trends to Watch Out for in 2022
- Prioritizing Quality
- Ensuring Business Continuity
- Wanting Business Flexibility and Adaptability
- Hiring Niche Talent
- Using Modern Technology
- Demanding Better Cybersecurity
- Outsourcing Surge Amongst Startups and Small Businesses
- Favoring Nearshoring Over Offshoring
- IT Outsourcing to Eastern Europe
- Preferring Remote Work
- Improving Customer Experience and Satisfaction
- Emphasizing Cost Reduction
- Practicing Transparency in Workflow
- 3 Most Outsourced Tasks in 2021
Let’s get started.
Outsourcing Trends 2021: 13 Key Trends to Watch Out for in 2022
Outsourcing gives companies a competitive advantage by reducing operating costs, enabling staffing flexibility, and saving time.
Because of these benefits, more companies are opting to outsource business processes, prompting an outsourcing market growth.
The global outsourcing market was valued at $92.5 billion in 2019, before the pandemic, by Statista. Additionally, a Grand View Research survey said that the BPO sector (Business Process Outsourcing) alone is worth $245.91 billion in April 2021!
This growing outsourcing industry includes IT (Information Technology), healthcare, accounting, and other sectors.
However, outsourcing can be futile if you don’t plan it properly.
To develop a successful strategy, you’ll need to be aware of the relevant outsourcing trends.
Here are a few outsourcing statistics and trends of 2021 that can help you make better outsourcing decisions in 2022:
1. Prioritizing Quality
Companies now emphasize providing high-quality services to their customers.
For this, they’ll need skilled employees and advanced technology — which can be expensive in most countries.
As a result, companies are outsourcing tasks like software development, bookkeeping, recruitment, payroll management, etc.
In fact, in a study published by GSA UK in 2020, companies said that the quality and value of outsourced goods were top priorities.
Moreover, outsourcing enables companies to offer their clients customized solutions. An outsourcing company is more likely to have the time, expertise, and resources needed to perfectly customize solutions than an in-house team.
2. Ensuring Business Continuity
Companies preferred outsourcing with multiple vendors before the pandemic. But now, most of them want a strategic partnership with one (or fewer) as per Search It Channel’s study in 2021.
Businesses now believe partnering with fewer outsourcing companies can ensure business continuity.
Frequently changing service providers can disrupt business continuity.
And a company is more likely to build a strong relationship with its outsourcing company when it’s working with the same team for an extended period. A strong bond can increase commitment and trust, which are essential for continuous outsourcing.
Additionally, businesses can ensure business continuity with outsourcers through a longer outsourcing contract.
Longer contracts can ensure you’re provided services even during uncertain times because you’ll work with a trustworthy outsourcing team.
3. Wanting Business Flexibility and Adaptability
The Covid pandemic and resulting lockdowns have been chaotic and disruptive. Many countries are still recovering from the year-long economic shock.
According to Deloitte’s 2020 Global Outsourcing Survey, these conditions are prompting businesses and service providers to become flexible with respect to work.
And to match the growing agility demands of companies, an outsourcing provider will need to:
- Accept if the company suspends or pauses a project abruptly if needed.
- Ensure work completion before the deadline, even if there’s a sudden Covid-related change in the outsourcing country.
- Increase collaborative efforts.
4. Hiring Niche Talent
According to a 2021 ManpowerGroup survey, 69% of employers find it hard to find talent in the US.
Most importantly, there is a shortage of talent that’s specialized in new technology. This shortage is the most significant barrier to the adoption of 64% of modern technology used in fields, like network and security, according to a Gartner 2021 survey.
And since it’s time-consuming to upskill in-house teams, companies are outsourcing tasks to vendors with expert talent.
By outsourcing to a skilled vendor, a company can instantly access the expertise it lacks in-house from other regions.
5. Using Modern Technology
Companies keeping abreast of emerging technology can use it to automate processes, increase efficiency, and simplify operations.
But software development, automation, IoT (Internet of Things), and other modern technology evolve regularly. It can be challenging to update technology frequently, and as a result, companies are outsourcing to service providers.
A service provider is an expert in their specific field. As a result, they’re more likely to update themselves about the advancements in technology than an in-house team.
Here are the most current and trending technologies used in the outsourcing industry:
A. Robotic Process Automation (RPA) Solutions
RPA is the software technology that helps build, deploy, and manage robots to carry out simple tasks.
The demand for RPA is increasing as companies realize they can save money by using robots to perform repetitive tasks.
According to a 2021 Grand View Research, the RPA market size was worth $1.57 billion in 2020 and can grow at a CAGR (Compound Annual Growth Rate) of 32.8% between 2021-2028.
B. Cloud Computing
Cloud outsourcing is essential to access other modern technologies like AI, RPA, and machine learning. It also empowers a company to collect, store, and access its resources on cloud.
C. Artificial Intelligence and Automation
Business and outsourcing companies use AI for the automation of repetitive tasks, like calculations or replying to messages.
Additionally, AI is helping providers improve customer service. Chatbots or cloud-based IVR (Interactive Voice Response) are examples of widely-used outsourced AI services.
A 2019 Grand View Research survey reported that the AI market would be worth $62.35 billion in 2020 and is predicted to grow at a CAGR of 40.2% from 2021 to 2028.
6. Demanding Better Cybersecurity
Digital transformation can open up several ways for intruders to access inside data.
In fact, a 2021 McAfee survey revealed that 81% of companies faced cyberattacks during the Covid-19 pandemic. But managing an in house security team can be difficult.
That’s why companies are hiring a Managed Service Provider (MSP). An MSP is a third-party service provider that manages a specialized operation, like data security.
Companies are handing over cybersecurity to MSPs as they’re more likely to have cyber security experts and advanced solutions. The demand for MSPs is so high that it was worth $152.02 billion in 2020 and is expected to grow to $274 billion by 2026, as per Statista.
7. Outsourcing Surge Amongst Startups and Small Businesses
By outsourcing, small businesses or startups can access the best talents and tools at economical prices.
These businesses outsource repetitive tasks to save time and money. Small companies are also less likely to have experienced employees due to their limited payroll budget, and outsourcing enables them to access the best talents.
To that end, 80% of small businesses in the US were planning to outsource at least one business process in 2021 to a vendor, according to a Clutch survey.
8. Favoring Nearshore Outsourcing Over Offshore Outsourcing
Nearshore outsourcing involves hiring a third party from a neighboring country to complete a business task. And offshore outsourcing is outsourcing to a faraway country, usually located in a different time zone.
In the post-pandemic world, companies are nearshoring more than in previous years.
In fact, a McKinsey and Company survey in 2020 released that 60% of fashion stakeholders and Sourcing Journal readers expected a rise in nearshoring.
Similarly, a 2020 report by the Vienna Institute for International Economic Studies summarized that German companies were actively considering nearshoring.
This could be due to the relative comfort companies experience in managing supply chains over a shorter distance and smaller time zone differences of nearshore companies.
Additionally, navigating Covid-related health regulations and travel restrictions in distant and culturally different countries can be a huge business challenge. Nearshoring may empower businesses to overcome some of these barriers without hurting their bottom line too much.
Check out our guide on Nearshoring vs Offshoring.
9. IT Outsourcing to Eastern Europe
According to Atomico’s State of the European Tech 2021 report, the capital investment in Europe in 2021 is $100 billion.
American and other European companies prefer East European countries, like Romania, Ukraine, Poland, and Belarus, for IT outsourcing due to their proficiency in English and cultural similarity.
Also, Eastern Europe has a high percentage of skilled people (including tech professionals), affordable talent, and strong data security.
Additionally, the salaries in several countries of Eastern Europe are low when compared to that in other countries, like the USA or Canada.
Curious to know about the average salaries in Eastern European Countries?
10. Preferring Remote Work
Due to Covid-induced lockdowns, remote work has become the new norm.
While only 27% of employees worked remotely before the Covid-19 outbreak, 44% are working remotely now, according to a 2021 SuperStaff survey.
The survey also says that 74% of companies are still planning to shift their on-site employees to remote work permanently.
11. Improving Customer Experience and Satisfaction
Customer experience is the key brand differentiator in 2021 and will continue to give businesses a competitive edge in the coming year.
To provide a better user experience, businesses may have to invest in customer support more.
Focusing on customer experience can help companies:
- Ease customer acquisition.
- Increase customer satisfaction.
- Strengthen customer relationships and brand loyalty.
But the unpredictability of customer call volumes can be difficult to manage.
Companies may have to quickly scale up and down and manage the workforce for proper functioning.
This opens up more avenues for outsourcing customer service.
According to the Global Call Center Outsourcing Market 2021-2025 report, the call center outsourcing sector is expected to grow at a CAGR of 3% and increase by $14.05 between 2021-2025.
Lower operational costs and delegating repetitive tasks are the advantages of outsourcing customer service.
12. Emphasizing Cost Reduction
Before the pandemic, companies were moving from cost reduction to prioritizing quality and scalability. The 2018 Deloitte’s Global Outsourcing Survey said that outsourcing companies were willing to spend to expand the business.
But this changed during the pandemic.
Deloitte’s Global Survey 2020 stated that 70% of the surveyed companies said cost reduction was their main outsourcing objective.
Most surveyed outsourcing companies said that although clients wanted agility, scalability, and technology enablement, the cost of the services was the primary decision-making factor.
This trend could continue in 2022 while the world economy recovers from the pandemic.
13. Practicing Transparency in Workflow
In the past years, most companies had little idea about the decisions made regarding the outsourced project as the outsourcing vendor handled it completely. This led to frequent misunderstandings.
However, there’s now a growing demand for transparent communication with outsourcing companies.
A study by the American Scientific Research Journal for Engineering, Technology, and Sciences said that expressive communication is crucial for transparency.
Additionally, a Deloitte study reported that creating contracts like SLAs can help increase transparency. An SLA can give your business a clearer idea about the quality of the outsourced work and help businesses hold the outsourcing vendor accountable.
Find out more tips for successful outsourcing in our detailed guide.
Now, let’s look at the most outsourced tasks in 2021.
3 Most Outsourced Tasks in 2021
Here are the most outsourced services in 2021:
1. Information Technology (IT)
According to Statista, the IT outsourcing industry is growing at a CAGR of 8.93% and will be worth a market volume of $551,956.3 million by 2026.
Of all the IT services, most companies engage in RPA and software outsourcing.
In fact, RPA and software development outsourcing together have a total contract value of $30 billion worldwide (SuperStaff 2021).
Other outsourced IT tasks include planning and implementing digital transformation, mobile app support and management, and data center management.
Commonly-outsourced administrative activities include telephone services, bookkeeping, event management, payroll management, and more.
Companies also hire virtual assistants (independent contractors who work on tasks from scheduling appointments to completing administrative activities).
The market size of virtual assistants was valued at $3,442 billion in 2019 and is predicted to grow by $44,255 million by 2027, according to a 2020 Allied Market Research survey.
3. Business Process Outsourcing (BPO)
BPO is the practice of hiring an external company to work on non-primary processes such as human resource management, omnichannel communication, IT services, etc.
Outsourcing is seeing several progressive trends due to the pandemic.
Studying these can guide you to develop successful business plans for 2022. Learning more about outsourcing trends can also help you handle uncertainties in your business and manage internal stakeholders effectively.
Go through the outsourcing trends listed above to develop a strategic plan for successful outsourcing.