Outsourcing as a Solution in the Current Labour Market Climate

59% of global companies outsource non-core business functions to reduce costs. Find out how you can leverage outsourcing solutions.

Robynn Farrell

Nov 11, 2022 12:28


$731 billion — that is the projected global spend on outsourcing for 2023. (Deloitte)

Whether you’re an established corporation or an innovative start-up, outsourcing offers solutions to many of the challenges faced in today’s labour market. And based on this expected and current spend, it’s clear that businesses are leveraging the benefits of outsourcing at an exponential rate.

Access to a global talent market means you are no longer bound by geographical constraints when outsourcing business functions. No more settling for subpar quality standards at inflated rates on undependable timelines. 

Outsourcing increases efficiency, decreases costs, helps scale businesses and improves employees’ overall happiness.

According to Clutch, 37% of small businesses have opted to outsource at least one business process, while 59% of global companies have resorted to outsourcing non-core business functions to reduce costs. This in itself is a testament to the direction the labour market is taking – and it’s not the traditional 9 – 5 in-house business model.

Could outsourcing be the new work-normal? 

What Is Outsourcing?

Outsourcing is the practice of hiring an individual/external company to provide products or services that internal employees or departments would normally provide. Outsourcing is not only a great way to alleviate your team of non-core, tasks but also an efficient way to navigate your way around the shortage of skills in the labour market.

Now that we’ve answered the question ‘What is outsourcing?”, let’s delve into the benefits of outsourcing, along with the risks, and the various types of outsourcing that would lend itself to your business.

Advantages of Outsourcing

As mentioned previously, there are various benefits of outsourcing, including:

  • Lower costs – outsourcing tasks internationally can help lower operational costs and make costs more affordable without lowering the quality of work.
  • Higher efficiency – outsourcing niche functions to a company that specialises in the field helps improve efficiency and productivity, increasing the quality of work and reducing the chances of having to redo tasks.
  • More Flexibility – after the pandemic, many businesses struggled to regain momentum while many employees felt challenged to readjust to office life. Therefore, resulting in businesses being more open to flexible work conditions as companies lean into remote and outsourcing solutions.
  • Access to global talent and innovation – access to highly-skilled professionals and innovative technology from anywhere in the world. Your business will no longer be limited to services and products offered locally.
  • Improved quality and customer experience – outsourcing allows businesses to acquire affordable expertise and offer customised solutions based on their clients’ needs.
  • Competitive advantages – having access to global expertise and technology at an affordable rate, allowing your employees to focus on core tasks, gives your brand an edge over your competitors.

Disadvantages of Outsourcing

Along with the many advantages of outsourcing come some disadvantages that need to be taken into consideration.

  • Less control – it can be challenging to control or manage outsourced or off-site activities as opposed to on-site activities.
  • Potential security risk – cyber attacks or loss of sensitive and confidential data have become more prevalent recently, creating a demand for advanced cybersecurity solutions.
  • Hidden or unexpected costs – it is not uncommon to receive a quote for outsourced services only to be tied up in the fine print of contractual agreements and incur additional or hidden costs.
  • Lack of quality control – some outsourcing companies focus more on profit than quality. Outsourcing tasks to the wrong freelancer or company may result in subpar results, which you may not be able to use.

Although there are pros and cons to outsourcing, the advantages of outsourcing certainly outweigh the disadvantages, especially if you mitigate the risks by using a company that vets outsourcing professionals for you.

Outsourcing in Today’s Labour Market

From the birth of the Industrial Revolution and its surge in demand for increased production rates to the cost-saving strategies of the 1990s – outsourcing is certainly not a new trend. The global outsourcing market is already up 80% since 2021, with 9 in 10 small businesses planning to outsource business tasks in 2022. (Clutch).

In today’s labour market, there is increased demand for services in almost every sector, below are the top five outsourced business functions

  • IT Outsourcing
  • Administration
  • Business Process Outsourcing (BPO)
  • Blockchain Development
  • Legal Processing

Other popular outsourcing functions include:

  • Content writing
  • Customer support service
  • Marketing
  • Supply chain management
  • Human resource management
  • Accounting
  • Engineering
  • Research and design
  • Computer programming services
  • Tax compliance
  • Finance
  • Training administration

The Future of Outsourcing

Outsourcing is evolving along with the needs of the current labour market. Here are some of the prevalent outsourcing trends to look out for in 2023:

1. Remote Work

At the onset of the pandemic, companies were forced to do remote work, with nearly 70% of full-time employees resorting to working from home. Although originally a concern, approximately 27% of businesses have seen an increase in productivity. Today 16% of businesses are fully remote, and 40% offer hybrid working solutions.

84% of employees have reported being happier working remotely, while 90% reported being more productive. This means a lower employee turnaround and higher deliverable expectations, making outsourcing services perfect for the current labour market.

Let’s take a closer look at the labour demands in various markets, the various types of outsourcing sectors and how to leverage this incredible talent resource for your team.

2. Artificial Intelligence (AI), Automation and Machine Learning

Automation and AI are being used more frequently in business, especially to complete repetitive functions such as replying to emails and enquiries and doing calculations. It has also helped simplify processes, increase efficiency, and improve customer service, such as chatbots. 

The automation, AI and Machine Learning outsourcing sectors are estimated to expand by 38.1% by 2023, which means so will the demand for specialised skills in this sector. And as industries are constantly evolving, having an outsourced expert on hand is more than beneficial to small businesses and large corporations alike.

Other popular IT outsourcing fields include cloud computing and Robotic Process Automation (RPA).

3. Eastern European IT Outsourcing

It seems China and India have competitors on the horizon when it comes to providing Information Technology or  IT outsourcing services. The Eastern European sector is expected to hit $2.69 billion by the end of 2022.

Eastern European countries like Ukraine, Romania, Poland, and Belarus are popular IT outsourcing solutions to countries like the United States and Canada due to their high proficiency in tech skills, affordability and level of data security.

4. Need for Higher Cybersecurity

As more and more processes are moving into the digital realm, so are cybercriminals. Forbes reported that a whopping 82% of businesses experienced cyberattacks in 2022 alone. Companies are therefore resorting to third-party managed Service Providers (MSPs)to handle their cybersecurity needs.

The MSP sector is expected to be worth $274 billion by 2026, making it a great outsourcing solution to an essential operation for almost any company in today’s market.

5. Preference for Nearshore Outsourcing

As we enter the post-pandemic era, companies are more inclined to outsource tasks to nearby or neighbouring countries than to countries located far away. 

According to a Bloomberg report, 80% of North American businesses are actively opting for nearshore outsourcing as it reduces the need to navigate different time zones and labour regulations, which can be challenging.

6. Workflow Transparency

In traditional freelance marketplaces, project management is often left solely to the outsourcing provider. However, businesses are looking for more transparency when it comes to communication.

Outsourcing Is The New Normal

Although there are both advantages and disadvantages of outsourcing business processes, outsourcing offers much more than financial benefits. There are many different types of outsourcing solutions in almost every sector that improve efficiency and offer more flexibility. Outsourcing also opens the door to global talent, putting your business miles ahead of your competitors. 

The freelance market, however, is inundated with individuals and companies claiming to offer the best in the business. Why not mitigate the risks by enlisting the services of an outsourcing company to manage all your projects from start to finish — start outsourcing without headaches today.

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