Many aspects of business operations remain impacted by the COVID-19 pandemic. From increases in remote work to companies reducing costs, things have not and will not be the same as they were prior to 2020. Along with ongoing market volatility and the skills crises, the pandemic’s effects are being felt with increased outsourcing. This escalation is being seen across different industries, and it looks set to dominate how companies navigate the uncertain times ahead. 

It’s estimated that outsourcing spending reached a staggering $245.91 billion in 2021, with forecasts of $435.89 billion by 2028. Evidently, there’s a megatrend of contracting third-party companies as a response to these seismic changes to the business landscape. Data drives the market and is redefining how outsourcing is done. There are two main forces driving the widespread adoption of outsourcing: (1) the upsurge of remote work, and (2) business’ digital transformation.

The first big factor that has increased outsourcing is the rise of remote work. It’s no secret that remote work’s popularity grew in response to social distancing measures in 2020. But how much has it increased, and are these changes going to continue into the future? According to a 2022 study by The Ladders:

• High paying remote job opportunities lept from 4% prior to the pandemic to 9% at the end of 2020, and 18% in 2021.
• For North America, 25% of high paying jobs will be remote by the end of 2022.

Remote work is here to stay
Hiring remotely is not without its benefits. In fact, one of the greatest upsides is that you get access to the global talent pool. At Jobsity, we believe that good talent can be found anywhere in the world and with the proper tools, anyone can contribute to a company’s goals. When you expand your recruitment options beyond geographic boundaries, the possibilities for innovation are endless.

The second major factor that has led to outsourcing’s resurgence is digital innovation. The digital transformation of many industries started a while ago, but it has skyrocketed since the pandemic. Global circumstances forced much of the worldwide workforce to go remote and find digital ways of getting things done.The benefits of this can be maintained! While digital transformation has been especially successful for industries like e-commerce, it has implications for all industries. Digital innovation impacts the way we interact with our colleagues and our clients.

And if businesses want to thrive in the post-pandemic world, they need to stay agile to developing trends, like digital work. According to an annual report from CISCO, over 70% of small businesses are ramping up their digital transformations. Digital Natives—small businesses leading the way in digital transformation—enjoy eight times more growth than those who are slow to innovate. It’s estimated that the United State’s GDP could grow by $2.3 trillion by 2024 if more small businesses took their digital transformation even further.

Outsourcing’s increasing popularity is owed to remote work and digital transformation. But what are outsourcing’s benefits? The potential upsides include reduced costs, a diverse workforce, better customer experience, efficiency, and the freedom to focus on core competencies.

Cost Savings
For many companies, the most important consideration when scaling a team is the bottom line. Outsourcing has the benefit of offering competitive rates. Clients don’t have to worry about recruitment fees or  overhead costs that come with hiring a traditional employee. They get to focus on just paying a base salary for outsourced staff. This often results in cost savings, especially when many outsourced contractors offer rates that are reasonable compared to US-based workers. 

Diversity
When a company partners with an outsourcing firm that recruits talent worldwide, this creates ample opportunities for the company to develop a more diverse workforce. While each staff member has a set of technical skills that they bring to the table, everyone contributes their different perspectives. A diverse team leads to innovation, rather than stagnation.

Improved Efficiency
Good firms have well-established processes for screening candidates. Their timelines will likely be shorter than a typical, in-house recruitment process. And instead of your company having to take a chance on a new hire, the outsourcing firm should have solid candidates that align well with your unique needs. The firm can focus on finding great staff while you focus on running the core parts of your business.

Freedom to Focus
Outsourcing auxiliary tasks grants your team the ability to focus on the “meat and potatoes” of your business. And when you outsource these auxiliary tasks, you’re ideally contracting people who are experts in said services. You don’t need to worry about having all expertise in-house. Companies that can focus on the core aspects of their business tend to thrive against competitors.

Ultimately, outsourcing may be an inevitable part of the future of business operations. But in the modern world, we have the luxury of being able to outsource in new, innovative ways. For example, significant advances in technology are allowing for increased digital automation. And rather than traditional outsourcing (when you contract an offshore, external team to complete an entire project), staff augmentation is becoming an attractive alternative. Staff augmentation involves contractors being integrated with your in-house team, so you directly supervise their workflow. This leads to more collaboration and efficiency. My team at Jobsity believes nearshore staff augmentation is the superior solution to outsourcing’s old school shortcomings. But no matter how companies choose to contract extra help, more businesses will begin considering outsourcing as it enters an improved era.