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.
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.
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.