General Outsourcing Statistics

Beginning our overview with some key facts about the outsourcing industry:

The global outsourcing market is projected to generate $769.7 billion in 2024.

The industry is expected to expand at a compound annual growth rate of 5.54% over the forecast period, reaching a total market size of $904.9 billion by 2027.

Source: Research and Markets

57% of outsourcing customers use it due to the need to cut costs

Besides, the most popular reasons for outsourcing are:

• Business strategy and operating model shifts (51%)
• Gaining access to new capabilities (49%)
• Internal leadership changes (33%)
• Increased competition (31%)
• Changing talent landscape (29%)
• Increasing employee expectations (24%)
• Evolving regulatory requirements (22%)
• Increasing and more complex cybersecurity threats (18%)
• Lack of employee skills or training skills (16%)
• Increasing pace of technology and digital transformation (14%)

Source: Deloitte outsourcing report

In the next 12 months, 60% of customers plan to evaluate their outsourcing strategies. Presently, outsourcing vendors that offer managed services and staff augmentation hold 55% of the market. Another 25% is secured by strategic suppliers who provide comprehensive technology-enabled outsourcing solutions. It is anticipated that transformational partners, who engage in collaborations with multiple providers, will represent the remaining market share.

Source: KPMG

The outsourcing market is divided into two sub-sectors: IT Outsourcing (ITO) and Business Process Outsourcing (BPO).

ITO encompasses areas such as cybersecurity, software development, and data analytics services. BPO includes support for legal, human resources, finance, customer service, and marketing.

Cybersecurity Outsourcing Stats

Gartner forecasts that by 2025, a shortage of skilled professionals will contribute to more than half of all major cyber incidents.

Consequently, 93% of organizations intend to outsource portions of their security operations to external vendors within the next two years.

Currently, security services represent 42% of the total risk management expenditures for companies, covering consulting, IT outsourcing, implementation, and hardware support. These expenses are projected to rise to $90 billion in 2024, marking an 11% increase from 2023.

Source: Gartner, PRNewswire

59% of small and medium-sized businesses outsource app development, delegating about 45% of their IT work. In turn, 68% of large companies do so, but with only 39% of their tasks in the ratio.

The most frequent clients of outsourced app development companies are the following industries:

• Retail/wholesale distribution (80%)
• Utilities (79%)
• Manufacturing (74%)
• Financial services (66%)
• Tech services (50%)
• Public sector/healthcare (39%)

Approximately 69% of businesses report that outsourcing app development costs them the same or less compared to in-house operations.

Conversely, only 54% of clients who outsource believe that the quality of services received is equal to or exceeds that of their own internal development efforts.

Source: Computer Economics

US Outsourcing Statistics

The United States holds the largest share of the global IT outsourcing market in terms of revenue, with forecasts suggesting the domestic market will reach $185.5 billion in 2024. This sector is projected to expand at a CAGR of 10.71%, achieving $278.7 billion by 2028.

In the realm of business process outsourcing, the US is also at the forefront, with expected revenues of $134 billion in 2024. The growth rate, however, is projected to be a modest 3.23% per year. As of March 2024, the business outsourcing industry in the US employs 574,000 people.

Around 66% of American companies outsource at least one business operation, impacting over 300,000 jobs in the US. The primary incentive for outsourcing overseas is the reduction in labor and health insurance costs, with benefits accounting for 29.6% of the total expenses that employers could save.

Source: IBISWorld, Bureau of Labor Statistics

Outsourcing Statistics in the European Region

From 2018 to 2022, the European IT outsourcing market expanded from €13.8 billion to approximately €21.8 billion in annual contracts, with a CAGR of 12%.

Within the EU, 77% of companies that outsource IT choose providers within the European Union. Additionally, they outsource to other European countries (17%), India (17%), the UK (14%), and the US and Canada (11%).

The UK is the top revenue generator in the European region, projected to reach $35.51 billion by the end of 2024.

Between 2018 and 2022, the EU outsourcing market generated 17,481 jobs. However, the region experienced a loss of 92,027 jobs (0.23% of the total) due to outsourcing abroad.

Source: Eurostat

Summary

The data indicates that the industry continues to expand, appealing to a broad range of companies. Currently, 76% of enterprises outsource IT operations, while 52% outsource business processes. These figures are expected to rise. The sector is driven by challenges such as the shortage of skilled labor, security risks, and the imperative to cut costs.

Moreover, the outsourcing industry now plays a significant role in the economies of many countries. Consequently, companies can obtain services more quickly and cost-effectively, which in turn stimulates growth in developing nations.

Should you consider beginning to outsource, or if you’re in search of remote experts for your project, feel free to reach out to us. At iDeaLogic, we specialize in recruiting IT professionals, building teams or setting up your development center.

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