Technology companies in history have all had one thing in common: they develop products and software at the right time when they see a great opportunity ahead. IT outsourcing is the secret behind these companies’ rapid technological development. Furthermore, the best opportunities always arise during times of crisis. The first and second waves of mass outsourcing of technology services were triggered by the Y2K problem in 2000 and the financial crisis in 2008.
Currently, we are experiencing the third wave of outsourcing, triggered by the Coronavirus epidemic.
Goldman Sachs reports that this wave is being boosted by the Covid-19 acceleration of ‘work from anywhere’ and is increasing technology demand around the world, across all industry verticals and geographies. In 2022 and 2023, Sachs estimates that IT service providers in India will grow their revenues by 13.1% and 9.7%, respectively.
Transforming the Way We Work
You can earn money using Amazon, Mechanical Turk, Upwork, or any of hundreds of other platforms. It can be as simple as transcribing the text on a picture of a receipt for 2 cents a minute, or as complicated as $200 an hour graphic design work.
With this third wave of outsourcing, new worlds of productivity will be opened up, opportunities will be expanded across the globe, and the nature of work will be altered forever.
Top 10 Industries for Third Wave Outsourcing
- IT (Information Technology)
We live in a digital age, so it makes sense that the demand for information technology services is growing exponentially. 92% of G2000 companies report outsourcing their information technology (IT) duties/roles. It is particularly popular among small businesses to outsource their IT in order to reduce costs.
- Web Development
Any brand needs a well-designed and functional website. At a glance, it differentiates you from your competitors. Outsourcing web design and development is a highly specialized skill, which is why you shouldn’t skimp on budget, at least not in the early stages. It could be anything from the logo of your brand to the layout of your website. Start-ups and small businesses don’t need a full-time or in-house web designer or developer, however.
- Human Resources
As your business grows, Human Resources (HR) becomes increasingly important. You may be better off outsourcing HR and payroll functions when first starting out. Your HR functions should, however, be outsourced to an onshore service provider. Each country has its own labor laws that need to be followed.
- Customer Service
An in-house call center can be expensive, regardless of whether your goal is to generate sales or maintain relationships with existing customers. Customer service and telemarketing roles can be outsourced to reduce overhead and improve efficiency. The ability to provide round-the-clock service may give you an edge over your competitors and help boost your brand image when you outsource offshore and onshore.
- Social Media Marketing
Brand awareness and reach can be increased by social media marketing, and presence is key. However, there are effective and ineffective ways to navigate social media. It is estimated that social media marketing revenue is over 137 billion, with a 25% increase year-over-year. Transparency resonates with users, and trends change as platforms add and change features. Therefore, it is essential to hire a professional to manage your social media accounts. Let’s say you own a small or medium business. During the early stages of growing your business, it might not be feasible to hire a full-time social media marketer due to a lack of tasks.
- Digital Markeing and SEO
Your website, landing pages, email campaigns, video scripts, blogs, and more all require content if you want to reach your customers effectively. If you are starting out, you may not be able to afford a full-time writer/editor, in which case outsourcing digital content can only be beneficial to your business. Once your content has been written, how can it be found among the millions of web pages on search results pages (SERPs)? It’s simple – search engine optimization. Do not let this fool you, as SEO is neither quick nor finite. SEO, or search engine optimization, is the key to being found online. In order to harness their true potential, both skills require years of experience and strategies. To determine which areas need improvement, you need an SEO consultant on hand at least every six months to run an audit.
- Accounting
One of the most commonly outsourced services is accounting. From tax consultations to financial planning and day-to-day bookkeeping, outsourcing your accounting will not only allow your team to focus on their core competencies. You will also be able to avoid making costly mistakes by hiring an accountant who specializes in this field, but most importantly, your bottom line will be impacted less.
- Cybersecurity
One of the most important services you can outsource is cybersecurity. It is not only your clients’ information that is at risk, but also your company’s intellectual property. For any business, big or small, data breaches can result in brand damage and substantial financial loss.
- Recruitment
In recent years, more and more companies have gone remote, making recruitment and onboarding slightly more challenging. It simply makes sense to outsource your recruitment functions since you won’t be recruiting on a daily basis.
- Legal Services
Typically, this service is outsourced onshore, because every country has a unique legal system, and your legal professional should be licensed to practice there. It makes sense to have a legal professional on retainer since the chances of you needing legal services are so slim.
The Future of Outsourcing
There are three ways in which third wave outsourcing differs from its predecessors. The Internet has disintermediated transactions in the first place. Middlemen are no longer needed. In spite of their geographical distance, employers and employees are more connected than ever before thanks to the Internet.
The greatest economic transformation in history will come from bringing human capital online.
The rise of global Internet connectivity also makes this wave of outsourcing the most beneficial to impoverished workers. There will be billions of people online in the coming years. Based on the worldwide distribution of income, these new users will contribute labor rather than capital to the global economy. Due to their low incomes, they are unlikely to be large consumers, and, therefore, are not the typical target audience for Facebook and Google advertisements. Instead, they will export their labor globally. Human capital will be harnessed by new companies. A major economic transformation will take place when human capital is brought online.
In addition, this wave of outsourcing involves a shift from input-based pay to output-based pay. With physical, face-to-face employment, most forms of compensation are input-based. Salary and discretionary bonuses are paid to workers.
Output-based pay refers to paying workers based on their performance. A factory worker may receive a piece rate per unit produced or stock options for the CEO. Due to its remote and distributed nature, the Internet is a natural candidate for output-based compensation. As a result, significant efficiencies will be achieved.
Technology is not the only benefit we receive; we can choose to develop only machine technology, disregarding human productivity, or design a better future by taking a holistic view of the macro environment – the global mix of skills, education, demographics, and interconnectedness.
In the next decade, billions of people will come online, transforming our economy. As a society, we must take advantage of these transformations, advance human potential, and harness our most valuable asset: our human capital.
Conclusion
In 2023, technology and innovation, marketing, customer service, human resources, finance, and design will be the most commonly outsourced sectors. Although the possibilities for outsourcing non-core tasks are vast, and these are certainly not the only services that can be outsourced to increase productivity, efficiency, and boost sales, these 10 services are trending and where we have seen most companies, whether small or large, invest their budget.
Let us help you find top talents in IT, technical support, digital marketing, and cloud services so you can leverage all the benefits of outsourcing in the new normal. Request a FREE copy of the e-book on Third Wave Outsourcing .
