By 2024, the business process outsourcing market is expected to be worth $370 billion. According to projections, the market would reach $525.2 billion by 2030, growing at a rate of 9.4% annually.
BUSINESS PROCESS OUTSOURCING MARKET REPORT HIGHLIGHTS
- Throughout the forecast period, the Training and Development Outsourcing segment is anticipated to exhibit the highest CAGR, approximately 11%. Through outsourcing, businesses can access a wealth of knowledge and resources without having to make the investment in forming internal teams for training and development. Additionally, time and resources from a company’s main business operations must be allocated to employee training. Internal teams can concentrate on strategic projects and core strengths when T&D is outsourced.
- Over the span of the projected time frame, the onshore segment is anticipated to record the highest CAGR of 10.0%. Outsourcing to the onshore location reduces the risks of political instability, data security breaches, and theft of intellectual property, which are issues with offshore outsourcing.
- From 2024 to 2030, the cloud segment is predicted to grow at the fastest rate, 11.2%. With cloud-based BPO, businesses can handle BPO activities without having to spend money on pricey gear, software licensing, and IT infrastructure. Cloud providers take care of these things, which saves a lot of money.
- From 2024 to 2030, the retail sector is predicted to grow at the fastest rate, 13.6%. Outsourcing gives companies access to massive data sets and real-time data analysis, which helps them better understand what customers anticipate. Businesses can make informed choices by concentrating on top-selling products, tracking returns, and market trends with the help of a data entry services company.
- From 2024 to 2030, the Asia Pacific region is predicted to have the greatest CAGR, at about 11.0%. The industry is anticipated to experience substantial expansion due to the progressions in digital technologies, the growing count of e-commerce platforms, and the growing inclination towards outsourcing non-core services in diverse sectors like telecommunications, BFSI, healthcare, retail, and travel & hospitality.
INDUSTRY STATISTICS ON OUTSOURCING
Business process outsourcing (BPO) and IT outsourcing (ITO) are the two subsectors that comprise the outsourcing market.
ITO comprises services related to data and analytics, software development, cybersecurity, and more. Legal, HR, financial, customer, and marketing support are all included in BPO.
IT OUTSOURCING STATISTICS
By the end of 2024, the global market for IT outsourcing is expected to reach $512.5 billion. The industry is expected to increase at a CAGR of 10.99%, with an approximate drop in 2020, and reach $777.7 billion by 2028.
SOURCE: DOITSOFTWARE
Healthcare, IT & telecom, and BFSI (banking, financial services, and insurance) are the industries that contribute the most to IT outsourcing revenue.
Hence, the BFSI sector spends 30.29% of the sector’s overall value, or roughly $155 billion in 2024, and outsources the most. Spending on healthcare IT services comes to a total of $120 billion.
SOURCE: DOITSOFTWARE
In overall, 76% of companies contract out IT work. In 2023, they allocated 8.1% of their budget on average to IT outsourcing services. 1.7% greater than it was in 2019.
Outsourcing in 2024 is being shaped by several key trends and predictions. Here are some notable ones:
Increased Use of AI and Automation: AI and automation continue to transform outsourcing. Companies are leveraging these technologies to enhance efficiency, reduce costs, and improve service quality. Robotic Process Automation (RPA) is particularly prominent in areas like customer service, HR, and data processing.
Focus on Core Competencies: Businesses are increasingly outsourcing non-core activities to focus more on their core competencies. This trend is driving growth in outsourcing areas such as IT services, payroll, and administrative functions.
Cybersecurity and Data Privacy: With rising concerns over data breaches and cybersecurity threats, outsourcing providers are investing heavily in security measures. Companies are looking for outsourcing partners who can ensure robust data protection and compliance with regulations like GDPR and CCPA.
Global Talent Pool Expansion: The talent shortage in certain regions is leading companies to tap into the global talent pool through outsourcing. Countries like India, the Philippines, and Eastern European nations remain popular destinations due to their skilled workforce and cost advantages.
Sustainability and Ethical Outsourcing: There is a growing emphasis on sustainability and ethical considerations in outsourcing decisions. Companies are increasingly choosing partners who adhere to environmental standards and ethical labor practices.
Nearshoring and Onshoring: While offshore outsourcing remains significant, there’s a notable shift towards nearshoring and onshoring due to geopolitical uncertainties, trade regulations, and the need for closer collaboration and better communication.
Enhanced Customer Experience: Outsourcing providers are focusing more on improving customer experience. This includes using advanced analytics to gain insights into customer behavior and preferences, which helps in delivering personalized and efficient services.
Remote Work and Hybrid Models: The pandemic-induced remote work trend is here to stay. Outsourcing companies are adopting hybrid work models, offering flexible working arrangements to attract and retain talent.
Rise of Specialized Service Providers: The demand for specialized skills is leading to the rise of niche outsourcing providers. These providers offer expertise in specific domains like cloud computing, AI, cybersecurity, and digital transformation.
Cost Management: Cost reduction remains a primary driver for outsourcing. Companies continue to seek ways to cut costs through outsourcing while maintaining quality and efficiency.
According to these trends, the outsourcing market is expected to be competitive in 2024 and strongly influenced by technology, security, and sustainability.
FREQUENTLY ASKED QUESTIONS
AI and automation are streamlining processes, reducing costs, and enhancing efficiency in outsourced services. Companies are increasingly leveraging these technologies for tasks such as data analysis, customer service, and supply chain management.
The shift towards nearshoring and onshoring is driven by factors such as geopolitical instability, the need for better control and communication, time zone advantages, and the desire to support local economies.
Specialized services such as IT outsourcing, financial services, healthcare outsourcing, and legal process outsourcing are gaining traction. Companies are seeking providers with niche expertise to handle complex, industry-specific tasks.
Sustainability is increasingly important, with companies looking for outsourcing partners committed to environmentally friendly practices. This includes reducing carbon footprints, using renewable energy, and implementing sustainable business practices.
Benefits include cost savings, access to specialized skills, increased flexibility, scalability, and the ability to focus on core business activities. Outsourcing also enables companies to leverage advanced technologies and innovative solutions.
Companies should consider factors such as the provider’s expertise, track record, security measures, cultural fit, and commitment to sustainability. Conducting thorough due diligence and seeking recommendations can also help in making an informed decision.
The preceding trends show how outsourcing will keep evolving in 2024 due to developments in the global market, shifting corporate goals, and technological improvements. Businesses are utilizing outsourcing as a strategic tool to improve their competitiveness, creativity, and agility in addition to cost reductions.
