It's no surprise that during two pandemic-stricken years, outsourcing for businesses dramatically gained traction as employers and corporate executives fell into an uncharted territory. As we head over to 2022, will outsourcing continue to be as transformative?
Throughout the years, a lot of discussions have surrounded outsourcing — whether it is a good or bad engagement, if it offers comprehensive data security, if it is gradually replacing accountants in the field, or if it's an investment worth of your resources.
The extent of the pandemic also signified the time businesses grappled to stay relevant as disruptions after disruptions shook up the industry. A seismic migration to digital platforms happened, urging organizations from disparate verticals to invent new and evolving business models that can weather whatever uncertainty that may come.
In essence, outsourcing paved the way to expand the capabilities, resources, and expertise of businesses in a faster and more cost-effective manner.
In the global context
Statista reported that the global outsourcing market was valued at US$92.5 billion last 2019, with the US contributing to a big portion of this population with over 68% of their companies, including small businesses, outsourcing business functions to low-cost countries. The UK comes next in the list, as 48% of their companies depend on offshore services due to the talent scarcity. A study reveals that with consistent patronage of outsourcing and shared services (OSS) solutions, there is a projected increase of market spending from US$688 billion to a whopping US$971 billion in 2023.
To this day, there is a seen continuity of the outsourcing practice. As the rest of the global economies try to fallout from COVID-19, employers find themselves in tighter competition to keep up with the rapid developments in the outsourcing arena. Let's see the developments to look out for this year.
2022 Trends in outsourcing
Emphasis in cybersecurityRemote work has brought about an upsurge in cybercrime, bringing the percentage to an alarming 102% last year. Ransomware attacks show no signs of slowing down, hence remaining as imminent threats. And to counter this debacle, outsourcing partners are looking at ways to further strengthen cybersecurity measures.
Multi-level security approaches such as multi-factor authentication are being deployed to protect confidential data of clients. IT leaders are elevating their game to a higher gear by investing in threat intelligence, bot detection, and vulnerability scanning to provide a safer security architecture and strategy to a market of remote clients.
Embracing RPARobotic process automation, or RPA is no longer a new concept to most of us. In fact, it rings a bunch of fears for professionals because of the misconceptions surrounding it.
But in this day and age, integrating RPA into the core of a business operations is a smart option. Since 2019, it has been among the top digital enablers for global shared services (GBS) bodies, and is expected to top the list for the coming years.
This trend is the first step to a fully digital working environment, more often seen on accounting and HR processes today. A full implementation of RPA would translate to efficiency, flexibility and profitability for companies as it catches all repetitive tasks lying around. This in turn, allows employees to focus on more important tasks they need to attend to. It’s a collaborative play on the strengths of both parties that brings out optimal results for the business.
In addition, we can also see bigger demands for cloud-based technology. With traditional hardware out of the picture, the cloud technology unleashes its full capacities such as automation of manual tasks, guaranteed security of files, updates in real-time, and its accessibility wherever you go. Both innovation and productivity are taking a good hit in this technology.
Complete shift to remote and virtualWorking remotely has grown from an add-on to a necessity, and as we move forward, it proves to be a valuable approach in reducing costs in the long run.
With the cloud infrastructure backing up your operations, working-from-home is made as seamless as possible. Workflows can be activated anytime and anywhere, without having the need to report in the office. And most importantly, working remotely significantly reduces overhead costs in the company.
Deloitte's recent survey unveils that both GBS and shared services centers (SSC) are looking into deployment of hybrid model for the next five years. Combining it with the power of the location-agnostic approach, employers can leverage the increased productivity among the workforce and reduced costs it brings.
Will outsourcing continue to grow?
According to PwC, 88% of executives today are undergoing a higher turnover rate compared to previous years. The mass resignation in the US had an austere impact on businesses, leaving executives on the fence about letting their workers go and offering them retention bonuses and providing enticing benefits. Meanwhile, this mass exodus of employees also opened their minds to a new defense mechanism: reducing their dependence on their employees.
Business owners are open to the idea of automating vacated jobs and digitizing certain internal processes. And to further mitigate these kinds of risks, these companies mostly opt to outsource their core functions. This strategic shift is a nod to the tightening competition in the labor market, in addition to the uncertainties brought about by the pandemic such as inflation, consumer purchasing power and regulatory updates. Through outsourcing, they lessen their exposure to these circumstances that may jeopardize the business.
The Great Resignation may be the trigger of the [predicted] pronounced emergence of business outsourcing in the years to come. Now that SMEs and organizations are realizing its myriad of benefits both for the business and the employees, plus the influence of globalization on their operations, outsourcing will be the beacon of competitiveness and cost-effective solutions for many.
Outsourcing for businesses summarizes the massive migration the industry goes through while we wait for the pandemic to subside. In the US, we can see that outsourcing finance and accounting services, HR functions, manufacturing, and IT are under immense growth, and we can expect it to be on the radar for the next years to come.
Looking for a partner to start your outsourcing engagement with? Let D&V Philippines be that company for you. We have almost a decade of experience handling the finance and accounting processes of businesses from different fields, and helped them elevate their service to another level. You can grab our whitepaper Outsourcing: How to Make it Work to know how we add value to our clients or contact us today for a free consultation.