IT Outsourcing Statistics

… A Multi Billion Dollar Industry

The most recent IT outsourcing statistics are proof positive that outsourcing will continue on a upward trend. As companies look to increase their profits and spend less money, outsourcing is a viable way to help companies accomplish both.

In spite of the millions of jobs that will be lost due to outsourcing, specifically offshore outsourcing the guarantee to save an enormous amount of capital is very appealing to companies. All kinds of businesses outsource. Banks, Software Companies, Car Rental Agencies, Credit card companies, even the U.S. government outsources to India every year to handle millions of American tax returns.

So there’s no question that outsourcing in its different forms is quickly becoming more of the norm instead of the exception.

Let’s take a look at some IT outsourcing statistics.

What Areas Of Business Are Outsourced The Most?

28% Information Technology or IT
15% Human Resources
14% Sales & Marketing
11% Financial Services

The rest are a combination of several areas.

The Top 5 IT Activities According To Computer Economics 2011

1. Software as a service
2. Application Development Services
3. Web site Development
4. Application Maintenance
5. Disaster Recovery Services

Outsourcing Types Statistics

The most common types of outsourcing include offshore outsourcing where a company hires a company from another country.

Nearshoring is when a company hires from a neighboring country. Onshoring is when outsourcing is done within the same country. It is also sometimes referred to as “domestic outsourcing.”

Immediately when someone mentions outsourcing, they assume it is “offshore outsourcing.” Perhaps, because it is this type of outsourcing that leads to the demise of domestic jobs.

This form of outsourcing is statistically the most common and appealing for companies with a goal of saving money. As offshore outsourcing, employs individuals although talented in their fields, come at a substantially lower cost than those from countries like the U.S.

It’s not surprising that offshore outsourcing is experiencing phenomenal growth and is on track to reach $25 billion by the year 2015.

Business Process Outsourcing

BPO generally is used to outsource areas like insurance, employee benefits, customer support etc.. It can be outsourced domestically but most often done offshore. The Philippines are a popular choice for this particular kind of outsourcing. So much so that by 2016, revenue from BPO will be $25 billion and add 3 million additional jobs in the Philippines.

Businesses That Outsource The Most

It’s estimated that somewhere between 2 and 4 million jobs in the U.S. and Europe will be lost to outsourcing. According to Deloitte Consulting, financial services will be the front runner, increasing offshore outsourcing expenditures to $356 billion to India. By 2015, 75% of major banking and other financial services world wide will be outsourcing to countries with very cheap labor.

Domestic Job Loss

The estimated number of jobs that will be lost due to offshore outsourcing may be economically devastating. By 2015 approximately 3.2 million jobs in the U.S. alone could be outsourced.

Cost Of Outsourcing

In every country where jobs are being outsourced to cheaper countries, the economic blow will be felt for years. On the other hand, in countries where they are the recipients of these outsourced jobs, it is a boon to the economy and to their quality of life.

A loss $140 billion in the U.S. in wages by 2015

The Top Countries For Outsourcing

1- Coming in at number 1 is India. With an estimated whopping 51% of the IT outsourcing market.
2- China’s share is about 30%. This could drop as western businesses are leery of the political climate.
3- Philippines Outsourcing for web design, animation and software development are the strengths.
4- Indonesia is quickly becoming a favorite with American business because of the higher standard of IT services.

As countries compete for the American dollar and European euro, outsourcing will continue for several years. Western companies will continue to utilize outsourcing as a way to control expenses and remove the need to manage areas of their business that are considered unrelated to their core business strategy.

Despite the controversy outsourcing creates, the reality is the IT outsourcing statistics confirm that this way of doing business is here to stay.