The Future of Global Outsourcing: Trends and Predictions for 2023 and Beyond

However, no matter how varied they are, one thing remains true—they may shake the outsourcing industry. SMEs can’t always keep up with big companies due to a lack of capital and expertise. However, buying in on the outsourcing game lets them compete with big companies. They are able to outsource tasks that require expertise that they don’t currently have. From CEOs to local staff to consumers, global outsourcing, when done right, benefits everyone involved.

Contrary to the popular notion that businesses sustained all their digital transformation projects last year, the survey shows that many companies were selective about which ones they pursued. And while 76% of respondents expect to slow down some transformation initiatives during the next 24 months, 96% expect to accelerate the execution of some transformation projects. Moreover, the crisis has reinforced companies’ symbiotic relationships with their service providers. We found that companies will continue to depend on service providers even though they will also invest more in developing in-house capabilities.

Prediction #1: The talent war continues

These trends in outsourcing reflect the evolving needs and priorities of businesses in a rapidly changing global landscape. By staying abreast of these developments, companies can make informed decisions about outsourcing strategies that align with their objectives and contribute to their long-term success. Whether it’s embracing digital transformation, optimizing customer experiences, or fostering a culture of sustainability, outsourcing continues to offer a range of opportunities for businesses to thrive in today’s competitive environment. AI and PA are also expected to have a major impact on the way in which outsourced projects are carried out. AI and PA can analyze large and complex datasets more quickly and accurately than ever before, allowing businesses to make more informed decisions about the services they are outsourcing. Furthermore, AI and PA will greatly reduce the amount of time needed to complete outsourced tasks.

• The danger of straining the budget through excessive hiring is very real, particularly for companies in the startup or rapid growth stages.
• However, no matter how varied they are, one thing remains true—they may shake the outsourcing industry.
• While the typical outsourcing hubs are the Philippines and India, the industry will explore other locations.
• In this article, we’ll explore some of the notable trends in outsourcing that are currently influencing businesses worldwide.
• In fact, according to a Deloitte survey, 57% of companies have already migrated their customer relationship management functions to the cloud.
• The research looked into the technical feasibility of automation in these tasks.

In 2019, Clutch found that 37% of small businesses already outsourced at least one business function, and Statista reported the total market value of the global outsourcing market to be worth $92.5 billion. More recently, Deloitte found that around 90% of companies see cloud computing How to Hire an ICO Developer as a vital aspect of outsourcing. With more BPO call centers working with fully remote teams, there’s always a need for technology that will support this setup. A recent Gartner press release reported that organizations will largely adopt cloud-based customer experience solutions.

The future of outsourcing: Where is the industry heading?

One of the reasons for this is the lack of business continuity management even for startups. Use the RFP submission form to detail the services KPMG can help assist you with. © 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP’s Privacy Statement. We bring together passionate problem-solvers, innovative technologies, and full-service capabilities to create opportunity with every insight.

One of the most significant impacts of AI and PA on global outsourcing is in the area of labor outsourcing. AI and PA are expected to drastically reduce the cost and complexity of labor-intensive operations, such as data entry, customer service, and other low-skill tasks. This reduction in complexity will make labor outsourcing more attractive and cost-effective, leading to an increase in the use of labor outsourcing in a variety of industries. Outsourcing offers numerous benefits such as cost savings, increased efficiency, access to specialized skills and talent, and improved productivity. According to a recent study by Grand View Research, global outsourcing is predicted to reach USD 525.5 Billion by 2023 and expand at a CAGR from 2023 to 2030.

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As the GSA report states, software development providers will be contracted as service integrators, sharing risk and responsibility. In response to extensive technological growth, many companies are increasingly turning to outsourcing as a way to remain competitive. The rapid development of such technological advancements as cybersecurity, artificial intelligence, blockchain, cryptocurrencies, etc. has created a pressing need for specialized expertise that has formed the future trends of outsourcing. Due to this, companies are seeking cutting-edge skill sets to outsource effectively and stay ahead in the market.

As the competition for outsourcing staff continues to heat up, so will outsourcers’ and clients’ willingness to use omnichannel and automation technology to offset the labor deficit. Speaking of technology, omnichannel and automation are on a fast track to become outsourcing mainstays in 2022. Things like robotic process automation (RPA), artificial intelligence, machine learning, and big data analytics have advanced to the point of being essential differentiators for outsourcers looking to gain a competitive advantage.

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Schaffer adds that the short contracts that come with fractional CMOs make them even more cost-effective since they don’t require lengthy tenures at a company. Out of an abundance of caution, many companies—62% of our sample—are very likely to renegotiate outsourcing contracts. (See Exhibit 3.) The areas for future discussion will likely be changes in the contractual terms and conditions, pricing structure, delivery model, and scope of providers’ services. At the same time, companies said that they are looking to service providers to shoulder more risk, particularly when it comes to maintaining the continuity of business operations. In addition to ensuring that employees working from home could operate critical business processes, such as order to cash, adroit companies shifted to online marketing, selling, and services delivery for the foreseeable future. To stay ahead, clients need to focus on remote services, access to the latest technologies, faster speed to market, and contracts that allow them to pivot as the business environment evolves.

Despite the fact that a lot of executives assume that business process outsourcing is not a wise option, this is one of the most prominent software development outsourcing trends right now. It shows that most businesses receive profitable growth as a result of this outsourcing strategy. After all, the technology can reduce costs, provide control, and promote efficiency. We expect AI to significantly impact outsourced call centers which require accurate and speedy transactions. Additionally, businesses often don’t dedicate the time required to recruit a new employee to leverage potential growth opportunities. This is where global outsourcing providers can have your outsourced team set up in as little as six to eight weeks.

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In this, a third-party provider takes care of a number of processes, ranging from recruitment, human resources, payroll tax, to overall management supervision. Apart from the engagement costs in such an approach, you only need to sacrifice time to train new offshore employees. With the disruptions brought about by the pandemic, virtual outsourcing solutions have become a competitive, strategic marketplace tool, allowing companies to improve response times and develop new products faster than ever. For growing businesses, there are more potential outsourcing applications than ever—and the use of these services appears to follow an uphill trajectory, year over year.

Companies are increasingly exploring a broader range of outsourcing destinations, including emerging markets in Asia, Eastern Europe, and Latin America. This trend allows businesses to tap into diverse talent pools, access specialized skills, and benefit from cost advantages in different regions. While data security was always prioritized for the outsourcing industry, the coming years will see greater enforcement in the form of better compliance with the laws of client-residing countries.

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With the huge pressure to keep costs down, service providers will also rely more heavily on mass automation tools that will create additional opportunities and reduce the staff necessary to support critical business applications. The problem for business process outsourcing, and the outsourcing industry as a whole, is that workers are spoiled for choice right now, and it looks like they will be for the foreseeable future. With so many options and such a hot labor market, outsourcers aren’t just competing against other local outsourcing providers for talent. They’re also competing with any firm around the world offering remote work, as well as other industries that are willing to meet the needs of prospective candidates.

The research looked into the technical feasibility of automation in these tasks. The results revealed that the work activities that can be automated include predictable physical work, data processing, and data collection. Meanwhile, unpredictable physical work, stakeholder interactions, and expertise-intensive tasks are less susceptible to complete automation. However, it’s likely that the effects of The Great Resignation will leave an impact on the global workforce market.

Trend 5: Greater Emphasis on Strategic Partnerships

Building on the past year’s responses, companies are adapting their outsourcing strategies to get a bigger bang for the buck. Sixty-one percent of the companies we surveyed said that they accelerated parts of their digital transformation over the course of the year, although 42% noted that they slowed down some projects. (See Exhibit 2.) Thus, the popular perception that digital transformation has only accelerated in 2020 may be misleading, with some qualifications becoming necessary to understand the ground realities. As BPO becomes more digitized, it also becomes more vulnerable to potential cyber attacks, and so the role of cybersecurity is more critical than ever. Outsourcing providers are stepping up their cybersecurity efforts to protect themselves and their clients.