A strategic combination of home-grown talent and IT outsourcing is enabling enterprises of all scale and diverse backgrounds to scale new heights in revenue growth and market share.
IT Outsourcing can bring important capabilities and assets, such as domain expertise, manpower, process discipline, latest technology, etc. that the enterprise cannot build on its own within a short span of time.
Here are some IT outsourcing statistics that outline how the industry has evolved in the last decade, and how it continues to evolve in the wake of the pandemic.
1. By 2028, IT outsourced services are projected to touch 435.89 Billion in revenues. (Grand View Research)
The global IT outsourcing industry was pegged at USD 232.32 Billion in 2020. It is expected to register an 8.5 CAGR which forecasts revenues of 435.89 Billion by 2028.
The impressive CAGR is attributed to the increasing interest of businesses to improve their business agility by incorporating IT-enabled processes. Also, constantly changing business dynamics (partly spurred by the ongoing pandemic) can also be attributed to this growth in global revenues.
2. 70% of clients resort to IT outsourcing for cost savings. (Deloitte Global Outsourcing Survey 2020)
Cost-savings continue to be the primary driver that favors IT outsourcing. Although IT outsourcing delivers several other benefits like business agility, access to global talent, innovation, etc. ultimately it is the cost-savings that make businesses decide in favor of IT outsourcing.
3. Robotic Process Automation (RPA) is the most outsourced service (Deloitte Global Outsourcing Survey 2020)
Robotic Process Automation (RPA) is low-hanging fruit in the Artificial Intelligence space. It is possible for any business to quickly reap the benefits of AI by implementing RPA solutions. It helps automate processes that are repetitive and can be carried out with the help of a rule-based algorithm. In the process, they also eliminate the errors and delays caused by manual processes. When it comes to ramping up RPA capabilities, IT outsourcing seems to be the primary choice for more than 75% of enterprises.
4. 48% of businesses are ramping up on RPA adoption (Business Wire)
The pandemic has turned the remote workforce into a permanent business model. This, in turn, has created a mandate wherein businesses must adopt RPA processes to automate their processes. Without the support of RPA and with a workforce that is already reeling under the pressure of remote working, businesses will not be able to sustain growth and development. At least 48% of businesses are ramping up on RPA adoption to create smooth business processes for their employees.
5. Outsourcing is the biggest enabler of cloud services
In 2021, 94% of enterprises already use the cloud in some form in their everyday business operations. The public cloud service market is expected to touch $623 Billion by 2023. (Hosting Tribunal)
IT outsourcing plays a crucial role in enabling cloud services for enterprises. From setting up the elementary cloud infrastructure to driving business scalability through continuous expansion, outsourcing is the biggest enabler of cloud services.
Furthermore, the pandemic situation has accelerated cloud adoption as organizations were forced to shrink their real estate footprint and distribute their workspaces to remote employee destinations. Outsourcing services enable organizations to quickly set up and scale cloud services to ensure business continuity.
6. 84.2% of outsourcing deals originate in the US (KPMG)
A KPMG study conducted in 2017 revealed that the USA accounts for 84.2% of the global IT outsourcing market followed by the UK at 5.2%. Europe and Australia occupied the remaining small portion of the market.
The zeal for innovation, the constant need to digitize operations, and a market where customer preferences are always volatile make businesses in the USA seek IT outsourcing services.
7. For 45% of businesses, data security is the biggest worry in IT outsourcing
As much as they are aware of the benefits that IT outsourcing offers, business leaders are also worried about the data security threats that IT outsourcing poses. IT outsourcing puts businesses in a position where they have to share their proprietary information and processes with the vendor.
Any lapse from the vendor’s side in protecting data could result in a worst-case scenario that could affect their customers’ interests. Given the global data security scenario where regulations are being tightened to ensure user data security and privacy, this one reason holds back some business leaders to fully venture into IT outsourcing.
45% of outsourcing businesses worry that a cloud-based service may not be as stable or reliable as an in-house system. The loss of intellectual property due to data security issues is also another cause of concern in IT outsourcing.
8. 44% of CIOs are upbeat about IT outsourcing (Fortunly)
Despite the apprehensions surrounding IT outsourcing, 44% of Chief Information Officers report themselves to be more willing to outsource their services than they were five years ago. The risks and cost of building applications in-house and the tangible benefits of IT outsourcing have led to this uplift in CIOs’ sentiments. Also, outsourcing makes it possible for CIOs to put in motion their ambitious digital transformation plans which with an in-house team might take a longer time to execute.
9. At $76.5 Billion, IBM earns the biggest outsourcing income
IBM is the world’s leading IT enterprise that also earns the biggest outsourcing income. IBM employs about 383,800 and has offices spread across the world, including the US, UK, and developing nations like India, Philippines, etc. It has a market capitalization of $105.66 Billion and earned $73.6 Billion in outsourcing revenue during 2020. In terms of outsourcing revenue generation, IBM is closely followed by Deloitte and Accenture.
10. 300,000 jobs are outsourced out of the US annually (Smallbizgenius)
Outsourcing creates massive employment across several developing nations like India, the Philippines, Ukraine, China, Poland, etc. At least 300,000 jobs are outsourced from the US to these countries on an annual basis. Even after the pandemic, outsourcing has not declined, which is a standing testimony to the value it continues to deliver.
11. 83% of IT leaders are planning to outsource their security to an MSP in 2021. (Security Magazine)
As cybersecurity threats swell in volume across the globe, enterprises are rushing to raise their defenses against possible data theft, DDoS attacks, Man-In-The-Middle-Attacks, and similar cybersecurity threats. At least 77% of IT leaders report a significant increase in cybersecurity incidents.
Turns out outsourcing is an efficient solution to ramp up their security. More than 83% of IT leaders are considering outsourcing their security functions as it gives a streamlined approach to managing security options. Also, outsourcing gives IT leaders with an already existing in-house security team to strengthen their defenses through strategic counsel.
12. Businesses with more than 50 employees are 66% more likely to outsource (Clutch.co)
37% of small businesses currently outsource at least one of their business processes. However, it is businesses with more than 50 employees that are more likely to outsource their business processes. For larger enterprises, driving operational efficiency while sustaining costs are the biggest driver of IT outsourcing.
The future of IT outsourcing
IT outsourcing delivers obvious benefits of cost-savings and improved operational efficiency. APAC region continues to be the primary destination of IT outsourcing services. USA, UK, and the European region constitute the biggest givers of IT outsourcing projects.
All the forecasts that have been made about the staggering growth of IT outsourcing have been proven right. The global pandemic which has slowed down the global economy has not impacted IT outsourcing significantly. In fact, the growth rate was positive and will continue to remain so in the years to come.