Will Outsourcing Continue to Grow in 2020?
The United States overtook Germany to become the top market in the world in 2019 for outsourcing work to other countries. Germany had moved into first place in 2018, but then the country fell back to second again in the past year as the American economy strengthened.
Where are those job opportunities headed? Four out of the top five countries for outsourcing service delivery are in the Asia-Pacific region. The Philippines was the biggest recipient in 2019, moving up two spots to receive the third-most contracts.
Massive growth figures came out of the U.S.-based outsourcing industry for the year. Genpact announced a 19% growth rate while reporting business process outsourcing (BPO) revenues of $2.9 billion. Their worldwide client revenues also rose by 13% to top $2.6 billion.
There are winners and losers in every market. AT&T announced that it would have 200 layoffs in the United States while outsourcing thousands of jobs to the Philippines and India. Dynata faces a lawsuit over a fire that killed BPO workers that includes allegations that the organization failed to provide a safe working space.
What Will 2020 Provide for the Outsourcing World?
Reports of COVID 19 and the uncertainty of infections creates a troubling economic headwind for the global marketplace. Stocks in the United States had their worst week in February 2020 since the financial collapse of 2008, and consumers are stocking up on numerous emergency supplies with calls to telecommute from significant employers happening in Washington and California.
Despite these challenges, the BPO and IT sectors will continue to expand in skilled service areas that cater to specialized clientele. One of the areas of focus for 2020 will be to create websites and social media accounts.
Telus International is part of that process, completing its acquisition of its “Competence Call Center.” It’s an opportunity that brings up to 8,500 workers across 11 European countries into the workforce. Cognizant also acquired El-Technologies, a French digital technology consulting firm, to increase their exposure to BPO processes.
24-7 Intouch announced its acquisition of Knoah Solutions to acquire BPO market exposure in India.
The Philippines Is Leading the Growth Trends
The Philippines Statistics Authority announced in 2020 that the business processing outsourcing sector would get placed into a new ICT subsector for services for GDP computation. Only half have published sites in the ICT and Media industry, and 40% have zero social media presence, creating a massive opportunity for new investments.
The Philippines continues to establish itself as a significant contributor to the outsourcing economy by implementing a training partnership for young adults. The Department of Labor and Employment and the mayor of Davao City have a memorandum of understanding to prepare out-of-school youth for jobs in BPO companies. Several senior-level appointments took place in February 2020 to push this effort forward.
New technologies are emerging in this space that make international markets competitive. Software, automation, and cloud computing make it possible for BPOs to reduce costs while accelerating their growth simultaneously. As this infrastructure grows more substantial in the Philippines, the island nation will find more opportunities to be competitive with the United States and Germany.
Companies are now investing in real-time customer engagement that happens on social media. This process creates opportunities to find first-hand product or service insights to address pain points immediately. The goal of this outsourcing effort is to create more value for the consumer with each interaction.
Technology will help markets like the Philippines build a more robust infrastructure. Education can help to increase worker skills. Both efforts will take time to complete, which means that the American and German markets should continue to lead the global outsourcing economy through at least 2025.
What Will Change the Outsourcing Market in 2020?
The past few years have seen startups embrace the idea of outsourcing opportunities to access cost-effective labor.
Startups and BPOs have become mutually dependent on each other, and this trend continues to be a leading key performance indicator for the industry. Outsourcing offers talent at a lower cost than local workers provide, making it easier to complete tedious tasks like trading or recruitment.
As BPOs get more opportunities, it gives individual companies and employees the experience they need to improve the quality of their work. The added money to the industry creates opportunities to invest in new technologies and improve efficiencies. Then the cycle of growth can start once again.
Politics is the only issue that stands in the way of the outsourcing industry for 2020 and beyond. A new U.S. presidential election could change the anti-western themes found in the Philippines, which received over $25 billion in American BPO revenues in 2017.
A continued “buy American, hire American” approach in the U.S. government could introduce anti-outsourcing legislation that could limit new growth.
Changes are happening to maximize opportunities in this sector. 2020 could be an exciting year for the outsourcing industry if these trends hold.