Outsourcing is considered one of the most resilient sectors amidst the pandemic that has flourished leaps and bounds. However, amongst other industries, the outsourcing sector has experienced severe disruptions too that have created an impact on the expected trends in this year. The BPO industry has rapidly evolved and embraced the latest technologies for the improvement of service delivery.
COVID-19 pandemic has severely impacted the BPO industry in a multi-faceted way. Post pandemic many BPO companies have to adapt to a lot of technological and digital changes for the continuation of their functions at the optimum condition. The most important factor that most of the companies have learned in this pandemic situation is going digital and flexible.
The outsourcing trends 2021 reflect the changes the pandemic brought to the outsourcing market this year. It suggests that businesses will need to look for providers with quality services, aim for high flexibility, and leverage updated technology while outsourcing in 2022.
In this article, we’ll discuss the most important outsourcing trends of 2021 that you should watch out for in 2022. We’ll also look at the most outsourced services of the year.
This Article Includes:
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Outsourcing Trends 2021: 13 Key Trends to Watch Out for in 2022
Prioritizing Quality
Ensuring Business Continuity
Wanting Business Flexibility and Adaptability
Hiring Niche Talent
Using Modern Technology
Demanding Better Cybersecurity
Outsourcing Surge Amongst Startups and Small Businesses
Favoring Nearshoring Over Offshoring
IT Outsourcing to Eastern Europe
Preferring Remote Work
Improving Customer Experience and Satisfaction
Emphasizing Cost Reduction
Practicing Transparency in Workflow
3 Most Outsourced Tasks in 2021
Let’s get started.
Outsourcing Trends 2021: 13 Key Trends to Watch Out for in 2022
Outsourcing gives companies a competitive advantage by reducing operating costs, enabling staffing flexibility, and saving time.
Because of these benefits, more companies are opting to outsource business processes, prompting an outsourcing market growth.
The global outsourcing market was valued at $92.5 billion in 2019, before the pandemic, by Statista. Additionally, a Grand View Research survey said that the BPO sector (Business Process Outsourcing) alone is worth $245.91 billion in April 2021!
This growing outsourcing industry includes IT (Information Technology), healthcare, accounting, and other sectors.
However, outsourcing can be futile if you don’t plan it properly.
To develop a successful strategy, you’ll need to be aware of the relevant outsourcing trends.
Here are a few outsourcing statistics and trends of 2021 that can help you make better outsourcing decisions in 2022:
- Prioritizing Quality
In an environment as competitive as today’s, it is important to ensure quality in your product. This does not just mean having a quality check right before your product ships to the customer, but instead means prioritizing quality throughout the entire process. This may seem like quite the undertaking, but a well-executed quality process will improve efficiencies and decrease cost over time.
Companies now emphasize providing high-quality services to their customers.
For this, they’ll need skilled employees and advanced technology — which can be expensive in most countries.
As a result, companies are outsourcing tasks like software development, bookkeeping, recruitment, payroll management, etc.
In fact, in a study published by GSA UK in 2020, companies said that the quality and value of outsourced goods were top priorities.
Moreover, outsourcing enables companies to offer their clients customized solutions. An outsourcing company is more likely to have the time, expertise, and resources needed to perfectly customize solutions than an in-house team.
- Ensuring Business Continuity
Companies preferred outsourcing with multiple vendors before the pandemic. But now, most of them want a strategic partnership with one (or fewer) as per Search It Channel’s study in 2021.
Businesses now believe partnering with fewer outsourcing companies can ensure business continuity.
How?
Frequently changing service providers can disrupt business continuity.
And a company is more likely to build a strong relationship with its outsourcing company when it’s working with the same team for an extended period. A strong bond can increase commitment and trust, which are essential for continuous outsourcing.
Your workforce will look for your guidance during these times. Keeping open and transparent communication, addressing their concerns, and on a regular basis, will help keep them engaged and maintain business continuity.
Additionally, businesses can ensure business continuity with outsourcers through a longer outsourcing contract.
Longer contracts can ensure you’re provided services even during uncertain times because you’ll work with a trustworthy outsourcing team.
- Wanting Business Flexibility and Adaptability
The Covid pandemic and resulting lockdowns have been chaotic and disruptive. Many countries are still recovering from the year-long economic shock.
According to Deloitte’s 2020 Global Outsourcing Survey, these conditions are prompting businesses and service providers to become flexible with respect to work.
And to match the growing agility demands of companies, an outsourcing provider will need to:
Accept if the company suspends or pauses a project abruptly if needed.
Ensure work completion before the deadline, even if there’s a sudden Covid-related change in the outsourcing country.
Increase collaborative efforts.
- Hiring Niche Talent
Finding the best talent is often about thinking beyond the confines of the usual profile. If an individual has a skill set that is relevant to a position but is currently working within another industry they shouldn’t be ruled out.
Talent without direct experience can not only fill a talent requirement but often adds value by bringing in new skills and best practices. A shining example of this technique in action is London’s Great Ormond Street Hospital, who consulted none other than Ferrari’s Formula One Pit Stop team to help them improve their intensive care patient handover process.
Sourcing internationally dramatically widens your talent pool, gives you access to the best skills and experience in the industry, and increases your firm’s competitive advantage. Furthermore, international candidates provide cross-cultural perspectives, and a diverse workforce helps to “encourage creativity and foster innovation” as quoted by Acas.
If you are looking to relocate candidates, ensure your relocation packages are competitive.
Relocation guides can also help candidates make that all important decision about whether to relocate or not.
And since it’s time-consuming to upskill in-house teams, companies are outsourcing tasks to vendors with expert talent.
By outsourcing to a skilled vendor, a company can instantly access the expertise it lacks in-house from other regions.
- Using Modern Technology
Companies keeping abreast of emerging technology can use it to automate processes, increase efficiency, and simplify operations.
But software development, automation, IoT (Internet of Things), and other modern technology evolve regularly. It can be challenging to update technology frequently, and as a result, companies are outsourcing to service providers.
A service provider is an expert in their specific field. As a result, they’re more likely to update themselves about the advancements in technology than an in-house team.
Here are the most current and trending technologies used in the outsourcing industry:
A. Robotic Process Automation (RPA) Solutions
RPA is the software technology that helps build, deploy, and manage robots to carry out simple tasks.
The demand for RPA is increasing as companies realize they can save money by using robots to perform repetitive tasks.
According to a 2021 Grand View Research, the RPA market size was worth $1.57 billion in 2020 and can grow at a CAGR (Compound Annual Growth Rate) of 32.8% between 2021-2028.
B. Cloud Computing
Cloud outsourcing is essential to access other modern technologies like AI, RPA, and machine learning. It also empowers a company to collect, store, and access its resources on cloud.
A 2021 Cloudwards survey revealed that the value of cloud computing can be $947.3 billion by 2026. In addition, 94% of all surveyed tech companies used cloud services in 2019.
C. Artificial Intelligence and Automation
Business and outsourcing companies use AI for the automation of repetitive tasks, like calculations or replying to messages.
Additionally, AI is helping providers improve customer service. Chatbots or cloud-based IVR (Interactive Voice Response) are examples of widely-used outsourced AI services.
A 2019 Grand View Research survey reported that the AI market would be worth $62.35 billion in 2020 and is predicted to grow at a CAGR of 40.2% from 2021 to 2028.
- Demanding Better Cybersecurity
Digital transformation can open up several ways for intruders to access inside data.
In fact, a 2021 McAfee survey revealed that 81% of companies faced cyberattacks during the Covid-19 pandemic. But managing an in house security team can be difficult.
That’s why companies are hiring a Managed Service Provider (MSP). An MSP is a third-party service provider that manages a specialized operation, like data security.
Companies are handing over cybersecurity to MSPs as they’re more likely to have cyber security experts and advanced solutions. The demand for MSPs is so high that it was worth $152.02 billion in 2020 and is expected to grow to $274 billion by 2026, as per Statista.
- Outsourcing Surge Amongst Startups and Small Businesses
By outsourcing, small businesses or startups can access the best talents and tools at economical prices.
These businesses outsource repetitive tasks to save time and money. Small companies are also less likely to have experienced employees due to their limited payroll budget, and outsourcing enables them to access the best talents.
To that end, 80% of small businesses in the US were planning to outsource at least one business process in 2021 to a vendor, according to a Clutch survey.
- Favoring Nearshore Outsourcing Over Offshore Outsourcing
Nearshore outsourcing involves hiring a third party from a neighboring country to complete a business task. And offshore outsourcing is outsourcing to a faraway country, usually located in a different time zone.
In the post-pandemic world, companies are nearshoring more than in previous years.
In fact, a McKinsey and Company survey in 2020 released that 60% of fashion stakeholders and Sourcing Journal readers expected a rise in nearshoring.
Similarly, a 2020 report by the Vienna Institute for International Economic Studies summarized that German companies were actively considering nearshoring.
This could be due to the relative comfort companies experience in managing supply chains over a shorter distance and smaller time zone differences of nearshore companies.
Additionally, navigating Covid-related health regulations and travel restrictions in distant and culturally different countries can be a huge business challenge. Nearshoring may empower businesses to overcome some of these barriers without hurting their bottom line too much.
Check out our guide on Nearshoring vs Offshoring.
- IT Outsourcing to Eastern Europe
Although India and China dominate the IT outsourcing industry, many tech businesses today are outsourcing tasks to Eastern Europe.
According to Atomico’s State of the European Tech 2021 report, the capital investment in Europe in 2021 is $100 billion.
American and other European companies prefer East European countries, like Romania, Ukraine, Poland, and Belarus, for IT outsourcing due to their proficiency in English and cultural similarity.
Also, Eastern Europe has a high percentage of skilled people (including tech professionals), affordable talent, and strong data security.
Additionally, the salaries in several countries of Eastern Europe are low when compared to that in other countries, like the USA or Canada.
Curious to know about the average salaries in Eastern European Countries?
Check out our articles on the average salary in Ukraine and Poland.
- Preferring Remote Work
Due to Covid-induced lockdowns, remote work has become the new norm.
While only 27% of employees worked remotely before the Covid-19 outbreak, 44% are working remotely now, according to a 2021 SuperStaff survey.
The survey also says that 74% of companies are still planning to shift their on-site employees to remote work permanently.
- Improving Customer Experience and Satisfaction
Customer experience is the key brand differentiator in 2021 and will continue to give businesses a competitive edge in the coming year.
To provide a better user experience, businesses may have to invest in customer support more.
Focusing on customer experience can help companies:
- Understand your audience and create buyer personas
Understand your customers. Who are they? What are their motivations? This information will allow you to build customer personas that you’ll later use to shape your strategy.
For example, categorize the types of customers your customer support team speaks with and note their needs. Also, collect data from your CRM or customer experience management platform.
Once you have enough information, create buyer personas and use them in marketing campaigns.
- Analyze your business objectives
What your business goals? New customers? Entering a new market?
Perhaps you are launching products or services into a current marketplace? Review brand studies and identify the barriers. How can they be overcome?
Ask yourself: how can your customer experience strategy framework help you achieve your long term goals?
Then try to find the answer to these questions:
What technology, people or processes do we need?
What gaps exist between customer expectation and actual experiences?
Where do we stand now in terms of a customer centric experience?
The answers to these questions will help you better shape your cx strategy.
- Reverse-engineer the experience you want to deliver
Steve Jobs was an advocate of “beginning with the customer experience and working backward to the technology”. This approach could work for your company, too.
For example, you can start by listing your brand’s customer experience stages. Where are the opportunities to make an impression? (For Amazon, for example, it’s early delivery.) Start from there and ask: what do we need to make sure customers go through this stage seamlessly?
And of course, you can start from customer expectations. Meeting and exceeding them is the ultimate goal after all, so knowing what your customers want you to do can help you figure out how.
- Emphasizing Cost Reduction
Before the pandemic, companies were moving from cost reduction to prioritizing quality and scalability. The 2018 Deloitte’s Global Outsourcing Survey said that outsourcing companies were willing to spend to expand the business.
But this changed during the pandemic.
Deloitte’s Global Survey 2020 stated that 70% of the surveyed companies said cost reduction was their main outsourcing objective.
Most surveyed outsourcing companies said that although clients wanted agility, scalability, and technology enablement, the cost of the services was the primary decision-making factor.
This trend could continue in 2022 while the world economy recovers from the pandemic.
- Practicing Transparency in Workflow
In the past years, most companies had little idea about the decisions made regarding the outsourced project as the outsourcing vendor handled it completely. This led to frequent misunderstandings.
However, there’s now a growing demand for transparent communication with outsourcing companies.
A study by the American Scientific Research Journal for Engineering, Technology, and Sciences said that expressive communication is crucial for transparency.
Additionally, a Deloitte study reported that creating contracts like SLAs can help increase transparency. An SLA can give your business a clearer idea about the quality of the outsourced work and help businesses hold the outsourcing vendor accountable.
Find out more tips for successful outsourcing in our detailed guide.
Now, let’s look at the most outsourced tasks in 2021.
3 Most Outsourced Tasks in 2021
Here are the most outsourced services in 2021:
- Information Technology (IT)
According to Statista, the IT outsourcing industry is growing at a CAGR of 8.93% and will be worth a market volume of $551,956.3 million by 2026.
Of all the IT services, most companies engage in RPA and software outsourcing.
In fact, RPA and software development outsourcing together have a total contract value of $30 billion worldwide (SuperStaff 2021).
Other outsourced IT tasks include planning and implementing digital transformation, mobile app support and management, and data center management.
- Administrative
Commonly-outsourced administrative activities include telephone services, bookkeeping, event management, payroll management, and more.
Companies also hire virtual assistants (independent contractors who work on tasks from scheduling appointments to completing administrative activities).
The market size of virtual assistants was valued at $3,442 billion in 2019 and is predicted to grow by $44,255 million by 2027, according to a 2020 Allied Market Research survey.
- Business Process Outsourcing (BPO)
BPO is the practice of hiring an external company to work on non-primary processes such as human resource management, omnichannel communication, IT services, etc.
The BPO industry is one of the fastest-growing in the world, with a predicted CAGR of 8.5% from 2021 to 2028 (Grand View Research 2019).
Wrapping Up
Outsourcing is seeing several progressive trends due to the pandemic.
Studying these can guide you to develop successful business plans for 2022. Learning more about outsourcing trends can also help you handle uncertainties in your business and manage internal stakeholders effectively.
Go through the outsourcing trends listed above to develop a strategic plan for successful outsourcing.