It’s not your imagination: Outsourcing is everywhere.
The act of delegating business functions to a third-party vendor instead of handling it in-house, outsourcing occurs today to the tune of $260 billion a year – a number expected to double by 2032.
Outsourcing’s upward trajectory confirms that it’s no longer just the domain of IT, which was among the first industries to normalize outsourced services. And despite lingering misconceptions otherwise, business process outsourcing is not interchangeable with offshoring. On the contrary: plenty of organizations right here in the U.S. are putting critical business functions in the hands of domestic third-party vendors (a practice sometimes called nearshore outsourcing).
Which begs the question, why? Why the proliferation of outsourcing of late?
Technology’s evolution in recent decades is arguably the key driver[1], as digital infrastructures and communication have all but erased outsourcing’s practical barriers. But there are many more reasons why outsourcing is appealing to businesses:
- Cost savings. By opting for contractors over internal hires (who bring hiring, training, management, and benefits and tax-related expenses), businesses can limit overhead and administration costs while still getting the services they want and need. This can be a win for businesses of all sizes and stripes, but tends to have the most calculable impact on small and mid-sized businesses who can’t necessarily afford to increase headcount. Outsourcing can also save businesses on infrastructure such as office space, technology, and related maintenance.
- Access to expertise. Outsourcing connects businesses with external experts who work across numerous clients and are on the cutting edge of their fields. These outside partners can often infuse companies with invaluable insights related to best practices, changing marketplaces, and so much more. Even more, outsourcing lets organizations tap experts anywhere in the world without the complexities of remote hiring.
- Efficiency gains. With outsourcing, businesses hire talent only for the hours they need, which is often less than 40 hours a week. Beyond inherent cost savings, this lets businesses focus on their core competencies, which also boosts momentum and time-savings. Forbes summed it up nicely: “You may be able to do the tasks in-house, but that time will take away from your current full-time salaried staff’s accomplishing more strategy-specific goals.”[2]
Outsourcing Across Industries
Marketing, IT, accounting, customer service, legal, HR – it’s increasingly common for businesses across industries to place any or all of these critical business functions in the hands of an outside specialist, in part or in full. In addition to the larger wins outlined above, there are unique benefits to outsourcing each of these functions:
Marketing. Nearly 59% of businesses outsource marketing, for good reason[3]: Marketing is increasingly tied to digital tools and technology. Leaning on an expert or agency who merges creative output with these dynamic tools positions businesses to maximize budgets and results. Even more, many leading creatives and marketers prefer to work independently or in agency settings rather than on payroll with businesses outside of their field.
Information technology (IT). IT consulting comprises the largest share of professional services organization sales worldwide[4]. Put another way, outsourcing IT has almost become a no-brainer for businesses of all sizes looking for round-the-clock, skilled, and cost-efficient tech support, network management, and cloud services[5].
Accounting. Accounting and related financial strategies are central to business outcomes. As such, outsourcing to a specialist with a vast network of clients, industry peers, and/or industry-specific expertise is often smarter than leaning on in-house employees whose perspectives and tools might be much more relatively limited[6].
Customer service. Quality customer service is crucial to the success of any business. It’s also time-consuming and sensitive, which is why customer service outsourcing has gained momentum in recent years (a shift also fueled by the rise of e-commerce). By outsourcing contact centers, live chat support, and help desk services, companies can provide 24/7 customer care for less, typically, than they’d spend on an in-house customer services team. Solid customer service has the added benefit of safeguarding against the risk of negative reviews that can bring social fallout and, with it, larger PR and damage control needs[7].
Legal services. Like Forbes pointed out, tasks including document and contract review, litigation support, and legal research don’t necessarily require external counsel – and their accompanying rates. Often abbreviated LSO, legal services outsourcing is the rethinking of this age-old practice. Many organizations today strategically and increasingly outsource to third-party legal services providers who charge less than law firms.
Human Resources (HR) – HR outsourcing grew from $18.65 billion in 2023 to $19.97 billion in 2024 and is expected to reach $31.14 billion by 2030. Benefits administration and payroll remain the most commonly outsourced HR functions, yet high-stakes and interpersonally-focused needs such as HR compliance support, hiring, and employee relations are increasingly handled out of house. This seismic shift can initially raise eyebrows: How can HR, which intends to optimize workplaces, be effectively handled by someone on the outside? Companies sometimes worry that outsourced HR services might require handholding, lead to loss of control or culture disconnect, or just become one more thing to manage. Luckily, with the right outsourced partner, none of these concerns hold water. An experienced outsourced HR firm like myHR Partner will endeavor to understand each client’s unique culture and approach the relationship accordingly.
Is your business or nonprofit looking for reliable, personalized HR expertise? Lean on myHR Partner. Providing full-service outsourced HR since 2002, myHR Partner embodies a profound passion for HR, with the social proof and satisfied clients to show for it.
Reach out today for a complimentary myHR Partner consultation.
[1] https://www.google.com/search?q=technology+driver+of+outsourcing&sca_esv
[2] https://www.forbes.com/councils/theyec/2019/11/07/to-outsource-or-not-to-outsource-10-strategies-for-deciding/
[3] https://mbudo.com/en/blog/ten-advantages-outsourcing-marketing-department-activities
[4] https://www.statista.com/statistics/934784/professional-services-worldwide-type-of-work-sold/
[5] https://www.uschamber.com/co/run/technology/how-to-outsource-it-services
[6] https://www.uschamber.com/co/run/finance/signs-you-should-outsource-your-small-business-accounting
[7] https://www.forbes.com/councils/forbestechcouncil/2021/05/14/six-reasons-outsourcing-could-benefit-your-business/
