The Case for Outsourcing in 2020: Should You Prioritize It This Year? (Infographic)


Labor cost savings is a given benefit from Business Process Outsourcing (BPO), with many companies reporting saving of up to 70% of their workforce costs. But in recent years, outsourcing has evolved from being a mere low-cost alternative to hiring in-house employees, to a critical business strategy that many small, medium, and large enterprises have adopted extensively.

For these businesses, cost savings were not the only reason why they opted for outsourcing services.

Some opt to outsource their non-core business processes to specialized outsourcing providers and focus on their key business processes and operations in-house.

As the Outsourcing and Shared Services (OSS) industry mature further, outsourcing providers are now presenting better options for businesses to push outsourced services from non-core activities to more advanced and more core business areas. This is further enhanced with advancements in cloud technologies, Robotic Process Automation (RPA), and other disruptive outsourcing technologies that are much more secure and effective.

The question many businesses are asking themselves whether 2020 is the right year to prioritize the implementation of outsourcing initiatives in their companies. The following provides an overview of the current state of outsourcing and the considerations they need to assess thoroughly before they jump into the outsourcing bandwagon.


The Current State of Outsourcing

The OSS industry has experienced tremendous growth, with the global outsourcing market practically doubling in size during the last eight years. The global traditional outsourcing industry generated revenue of up to US$92.5 billion in 2019. The BPO market accounted for as much as US$26 billion in outsourcing contracts from this pie, with the Information Technology Outsourcing (ITO) market getting a more significant piece at US$66.52 billion.

The Global BPO industry is expected to continue with its rapid growth of up to 11% by the year 2023. Global IT outsourcing likewise will not slow down and is expected to reach the US$413.7 billion level by the end of the year 2021.

Many businesses are planning to increase their outsourcing budgets. Among these include up to 85% of logistics leaders who rely on outsourcing to help them meet or even exceed their end-to-end supply chain as well as their overall business objectives.

Will your company be among these businesses riding the global outsourcing wave?

Considerations Before Outsourcing Business Processes

Implementing effective and successful outsourcing initiatives is not as simple as choosing the cheapest outsourcing agency out there and dump all your non-core business processes on them in one go. There are several factors and pre-requisites to consider and carefully study before you start on an outsourcing project.

The following provides an overview of these primary business areas that you should take into careful consideration:

  • Outsourcing Areas

Business process outsourcing started by outsourcing small operational processes like data entry, but it has now evolved to include more complex and more strategic business processes. The following provides a good visualization of this trend:

The boundaries of outsourcing are being stretched and pushed further in. Companies that could identify strategic areas that they can outsource effectively without any security or operational issues would be at a more significant advantage. Some of these vital areas include:

  • Idea and Innovation Generation

Outsourcing idea generation can beef up a company’s capacity to innovate and develop more areas where they can achieve a group. This will give them a highly competitive advantage against stagnating competitors

  • Digital and Social Media Marketing

Digital and social media marketing is a strategic marketing initiative that can provide businesses with more significant potential to generate more clientele and subsequent growth. This is a hot topic that deserves its discussion – so what’s out for our upcoming infographic about these tools!

  • More Specialized Areas

Technological advances are providing businesses with new service areas to expand to. These include analytics, applications that drive higher efficiency, personalization, and integration of technologies. Specialized outsourcing partners can help jumpstart your businesses in these new areas.

  • Competitiveness

Choosing an outsourcing partner has shifted from being price-driven to selecting competitive providers with the processes and the people who can do the job much more efficiently. It would be to your best advantage to choose outsourcing companies that focus more on the competency of their people and provide more emphasis on the quality of services they provide.

  • Security

Security is one of the critical factors many companies take into consideration when choosing an outsourcing partner. Among the top considerations is data security and loss of intellectual properties, particularly when outsourcing involves moving certain business areas to the cloud. That is why it is important to take into consideration the outsourcing partner’s security protocols and implementations, as well as their compliance with information security laws.

  • Technologies

The adoption of cloud technologies has been one of the critical factors that have improved outsourcing processes in recent years, but that’s not the only technology available that you should take into consideration.

The use of Robotic and Cognitive Process Automation is currently being considered for adoption by as much as 70% of outsourcing providers as a useful tool to improve outsourcing initiatives. This includes companies servicing the financial sector, whereas much as 83% are considering Robotic Process Automation (RPA).

Other technologies taken into consideration include Advanced Machine Learning (ML) and Artificial Intelligence (AI) business process automation models. But take note that while there is a trend towards automation, businesses will still experience and receive personalized services, particularly on processes that are much more effective with the human touch.

Outsourcing in a Global Pandemic Scenario

The ongoing COVID-19 pandemic has swept the world by storm and has affected global business and commercial communities. It has caused tremendous disruption in the global supply chain, making the company rethink the way they do business.

This is driven mostly by how the global consumer behavior has been affected by this viral slowdown. While some elements in the consumer sector have been greatly affected, the appearance of new and innovative services that cater to the needs of a quarantined consumer community have made them practically household names. This include innovations in social networks and collaboration, streaming services, news and education, eCommerce, and gaming.

When quarantine ends, the global business community will wake up to a new outlook of the marketplace, and in retrospect, will realize how vulnerable their businesses are. It is at this point that it would be advantageous to start considering a digital transformation of certain aspects of your companies and find the viability of outsourcing strategic processes and services.

But while the continuity of your businesses may have been vulnerable in a pandemic or similar global scenario, it would be wise for outsourcing partners tp consider on how they can cope up with the situation. They should analyze how effective they are in providing continued services, their resiliency programs, their ability to adjust, and be able to provide alternatives should their primary services are impaired.


The Take-Away

Outsourcing remains still relevant in 2020 and will continue to be consistent in the coming years. Current trends in the business and consumer markets continue to point to the efficacy of outsourced services, including their resiliency in maintaining services even in a global slowdown.

With more security enhancements in place, better and more effective technological advances available, and an increase in service efficacy that can handle strategic business processes, 2020 is the year to put outsourcing in your priority list.

Jomer Gregorio

Jomer B. Gregorio is a well-rounded expert when it comes digital marketing. Jomer is also known as a semantic SEO evangelist and practitioner. Check out our Digital Marketing Services today and let us help you in achieving positive and profitable results for your business.