Outsourcing has become a popular option for many businesses in various fields of operation. What started as a common practice for the manufacturing industry has now grown and evolved into an industry itself. So, if you’re considering investing in this service, you may wonder about its effectiveness and outcomes. That’s why this article will give you an insight into what industries outsource the most and the reasons behind it.
By having an insight into this market’s size and global statistics, you’ll better understand if it’s the right option for you. Furthermore, by looking into which industries outsource the most, you’ll gain knowledge about the best practices and reasons behind them. Continue reading to discover what are the most commonly outsourced services, the industries that use them, and the reasons why!
The Outsourcing Market and Its Size
The outsourcing industry began as a common practice in manufacturing companies looking for ways to meet high demands and ensure product quality. However, when other businesses realized the potential benefits of this service, it started gaining popularity and soon developed into an industry itself.
Even though it hasn’t been around for a long time, some believe that it plays a vital role in the future of many business spheres. One of the most affected regions where there’s substantial growth in this industry is North America. By implementing advanced technology in the field and including large regional players, more growth opportunities arise every day.
As more people show interest in starting their own outsourcing company, it’s essential for them to understand where it all began and its history, the basic principles and the trends we are going to explain.
One of the latest trends in the industry, known as cloud computing, has piqued the interest of many business owners. Thus, even though the market growth has been steady, all the latest technological advancements have accelerated the pace. To better understand the magnitude and importance of outsourcing services in the global business landscape, you should take a look at the global statistics and revenue generated by this industry.
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Global Statistics and Revenue Generated by the Industry
As mentioned, this industry has been experiencing constant growth throughout the years. For example, since this industry was worth 92.5 billion dollars in 2019, it had increased by around 7 billion from the year before. Furthermore, since this market has experienced steady growth since 2022, many market researchers believe it’ll continue to rise from 2023 to 2030.
With an estimated value of 280.64 billion in 2023, it’s believed to reach a Compound Annual Growth Rate (CAGR) of 9.4% throughout the period mentioned. The regions expected to experience the most growth are North America, Europe, Asia-Pacific, South America, the Middle East, and Africa.
Furthermore, due to this rapid growth, many investors are optimistic that the market will reach a multimillion-dollar mark by the end of 2030. Based on the actual data regarding the period between 2018 and 2023, the approximate revenue forecast for 2030 will likely reach 525.2 billion dollars.
Even though various services fall under outsourcing, two segments have proven as most valuable. The first is IT & telecommunication, with a revenue share of 34% when it comes to end-use. On the other hand, the customer services segment has a revenue share of 32%.
Major Companies Dominating the Market
As with any business, there are several major companies that dominate the outsourcing market. The ones that have positioned themselves as leaders in this fast-growing field are the following:
- Wipro Technologies
- Infosys Technologies
- Accenture
- HCL Technologies Limited
- ISS World
- IBM
- NCR Corporation
- Capgemini
- Cognizant
- Delta BPO Solutions
List of Industries that Outsource the Most
After learning about the basics of the outsourcing market and the companies dominating the market, you should also understand which industries use this service the most. Before deciding whether or not to invest in this practice, it’s important to know the reasons why many people praise it. That being said, here are the industries that use outsourcing the most:
- IT services
- Health care
- Finance
- Retail
- Insurance
IT services
The main industry that uses outsourcing the most is the IT sector. Many renowned companies that have reached international recognition, such as Skype, Opera, and Apple, rely on such service providers to lower costs, deal with storage capacity, and ensure quality products. Outsourcing in the IT industry can include utility services, software development, and even cloud-based outsourcing.
Since this practice allows you to take advantage of external expertise, accelerate time to market, and reduce costs, it also gives you a competitive advantage. Furthermore, by increasing productivity, you’ll be able to focus on the core business aspects.
Health care
Besides IT services, many healthcare providers also invest in outsourcing revenue cycle management. Since this industry has to deal with large volumes of paperwork, many companies turn to this practice to relieve some of the complexities. Furthermore, the healthcare industry also has to be mindful of maintaining HIPPA compliance and reviewing insurance documents from numerous patients.
Remember that a hospital’s main priority should always be delivering adequate patient care. Thus, relieving the pressure of dealing with large volumes of documentation, you’ll be able to focus your attention on more important matters while prioritizing patient needs.
Moreover, those who are constantly looking for ways to revolutionize the field of medicine are also subjected to various costs. With Healthcare BPO (Business Process Outsourcing), healthcare businesses can lower their expenses by reducing administrative costs.
Finance
Regardless of the business niche, every company has to keep track of its financial situation and obligations to ensure efficient operations and compliance. Even though you can manage the financial statements and accounting procedures in-house, it is a time-consuming and complex task.
Thus, outsourcing in the financial field usually comes down to subcontracting an experienced service provider who will act as your financial team. Depending on your needs, you can assign either a portion or all the accounting procedures to concentrate on more important matters.
Furthermore, outsourcing banking operations is thought to be more cost-effective and efficient than in-house banking. Not only is this practice known to increase the speed of completing urgent tasks, but it also improves daily operations. Even though the financial industry has just started adopting these services, it’s believed that they also reduce operational risks.
Retail
Subcontracting with a third-party vendor is also a common practice in the retail industry. Many companies in this field have to focus on large volumes of products, their quality, and deliverability. Since the business relies on customer inquiries and satisfaction, optimizing each step of the process is important.
For example, if a first-time customer orders something from the retail company and it takes too long for the item to be delivered, it’s likely that that customer will not order something again. Thus, to ensure that the companies manage the high demand efficiently, they often turn to outsourcing to lessen the workload.
One common practice is hiring contract screen printing services that also include finishing and shipping services to create unique and high-quality products while also being mindful of the storage capacities and delivery time. Besides aiding the manufacturing and shipping process, outsourcing can also be used to ensure fast customer replies and flawless communication.
Insurance
Lastly, outsourcing is a fairly common practice in the insurance industry. Since businesses in this field must be mindful of government regulations and pharmaceutical and healthcare needs, they often struggle to stay on track with all the recent changes and requirements. Furthermore, the complexities that come along with large-volume customer data systems can lead to lowered productivity and higher employee strain.
Many businesses hire insurance outsourcing services for content management, administrative duties, data capture, and customer services to ensure the company runs efficiently. Not only can this practice improve overall efficiency, but it’s also known to reduce many in-house costs. Remember that each task requires a highly skilled and experienced employee capable of managing the high demand. Thus, outsourcing will also give you access to a global talent pool of professionals in the field.
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Reasons for Outsourcing
Even though many businesses choose to outsource for their own unique reasons, depending on the industry they’re in, there are a few common benefits that you can expect. The ones that play a vital role in choosing to invest in outsourcing are the following:
- Cost-saving
- Enhanced productivity
- Improved efficiency
- Access to a global talent pool
- Utilizing 24/7 work cycles
- Greater operational flexibility
- Competitive advantage
- Access to innovative technological resources
- Focus on core business functions
Conclusion
After discovering what industries outsource the most, it’s up to you to decide if this service is the right option for you. Before making a final decision, remember that outsourcing has many potential benefits that will give you an advantage in the market. Furthermore, with the insights about the global statistics and revenue generated by this industry, it’s obvious that more businesses than ever optimize their workforce with it.
So, if you’re considering investing in outsourcing services, check out what we at CLICKVISION BPO offer. With unique customer-tailored solutions, our team will ensure they meet your diverse business needs while also achieving outstanding results. As a comprehensive business solutions company, we’re committed to using the latest innovations to ensure your company’s success!