Outsourcing Trends: What to Expect in 2020

By: Maann Sagun, MDC, DMP
December 20, 2019

A new decade is just around the corner, yet you are still uncertain about outsourcing part of your services.

Businesses are now looking at becoming global, digital and more competitive. Hence, changes in outsourcing goals and expectations are also emerging. Moreover, experts believe we will be seeing significant transformations in the outsourcing industry in the next decade. To give you an idea of what to expect, we collated the major outsourcing trends in 2020 according to industry experts.

Experts expect the outsourcing market to see an annual growth rate of 7.4% in the next 6 years.
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Outsourcing Trends in 2020

The outsourcing industry saw remarkable growth in 2019 as more businesses looked for strategic ways to expand their operations. Moreover, advancements in technology opened more opportunities for cost-effective and faster processes. Thus, allowing businesses not only to save money, but also have more time to focus on core practices.

In addition, the cloud, robotic process automation (RPA) and single-instance enterprise helped increase the demand for outsourcing. Since, these digital capabilities are becoming easier to adopt, businesses are now shifting to more global and multifunctional models.

Outsourcing has always been one of the most effective ways businesses can save time and money. However, cost reduction will become less important as businesses look for new opportunities to innovate and create more value. To help you decide if now is the time to outsource, here are some forecasted outsourcing trends in 2020.

Cost Reduction to Value Creation

Companies choose to outsource so they can save on operational costs. Most companies pass the savings to the business, whilst some invest in technology, process improvements, talent development and upgrading their facilities.

Clearly, outsourcing not only provides professional services at a lower cost, but also opportunities to make the business more agile. However, experts believe that one of the outsourcing trends in 2020 is that businesses will want more value and improvements from the services they outsource.

Businesses are starting to look for more ways to become competitive in the market and more opportunities to improve processes, enhance agility and transform. Thus, creating more value and driving innovation will become an emerging trend in the next year.

Businesses can save up to 15% of their annual costs by outsourcing their services.
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Moreover, we will also see more advancements in technologies as the cloud, RPA and artificial intelligence (AI) continue to evolve and revolutionise the business industry. As such, businesses will also be looking into more specialist services to cope with emerging automation processes.

Businesses wanting to start outsourcing will still be looking at how this practice can help them reduce cost in 2020, However, organisations already outsourcing will be looking at more ways to access specialist, increase capabilities and better resources to help them become market leaders.

Non-core to Core tasks

Another reason why businesses outsource is to have more time for core functions and income-generating tasks. Outsourcing back office and non-core functions enable businesses to focus on client-facing activities. Their in-house staff can also have more time performing core duties and improve efficiency and productivity.

However, in 2020, organisations will focus on more advance areas of their operations and accessing a higher degree of specialisation. Hence, we will see a move towards outsourcing not only the back office, but also core business functions.

Also, with the increasing demand for digital transformation, businesses will be investing more in cloud services and new technologies. However, not all organisations have the capacity to adopt innovative technologies and processes. Thus, we can also see businesses looking at engaging disruptive outsourcing solutions.

Disruptive outsourcing can help businesses innovate and transform their operations faster.
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Through disruptive outsourcing, automation and increased product and service innovation can be achieved faster. Moreover, disruptive outsourcing will help reduce capacity and capability gaps, increase agility and provide access to intellectual capital.

Indeed, the strategic and competitive advantages disruptive outsourcing can provide will help businesses keep up with new technologies. Moreover, disruptive solutions may be the key for businesses to access more specialists to delegate part of their core services to.

Transactional to Strategic Partnerships and Collaboration

Transactional outsourcing is when clients outsource a specific operation with well-defined and repeatable processes. Businesses regard this approach as the most satisfactory outsourcing relationship as it has a success rate of up to 90%. However, with transactional outsourcing, there is little need for automation and customisation of the services being provided.

On the other hand, in strategic partnerships, outsourcing firms provide bespoke services based on the clients’ needs. It also allows better collaboration, resulting in more effective processes and meeting mutually desired outcomes. In addition, it supports the implementation of innovation and the creation of new value.

We will see organisations reducing their focus on the volume of outputs and use business outcomes as the measurement for outsourcing success.
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Experts also believe that one of the outsourcing trends in 2020 is businesses will be looking at increased goal and risk sharing with their outsourcing partners. Businesses will want to have equal responsibility, higher degree of openness and information sharing. Thus, they will be creating a more strategic alliance and deeper collaboration with their outsourcing partners.

Moreover, outsourcing arrangements will change from outputs-based to outcomes-based contracts. Furthermore, it will be driven by how much value was delivered and risks mitigated, and the increase in market reputation.

How can DBA help?

As a disruptive outsourcing services provider, DBA is well-equipped and ready for changes in the outsourcing industry. We provide high quality, value-added services that are standard and compliant with international laws and regulations.

We are a XERO Platinum Partner, and a Microsoft Partner Solution Provider. Also, our unique IT infrastructure is hosted in two cloud computing platforms—Amazon Web Services and Microsoft Azure. Therefore, we have the necessary solutions to help businesses innovate and automate processes for better performance and productivity.

As innovators, we also offer Change Management—enabling organisations to adopt new technologies and methods, to execute programs of change. Our vast knowledge of cloud services, and skills in advanced software and applications, can boost your agility and innovate your processes faster. Thus, we can provide you with the capabilities and tools you need to transform your organisation and achieve the best business outcomes.

Our various service packages can also be tailored to suit the needs and requirements of our clients. In addition, the expertise of our diverse talents is guaranteed to provide the right services businesses need to remain competitive and relevant in the coming decade.

Tell us your thoughts on the major outsourcing trends in 2020 and start outsourcing with DBA now.

Maann Sagun, MDC, DMP

Maann is a Communication Specialist and educator—masking as the Senior Content Writer of DBA. She is also a Digital Marketing Professional and specializes in SEO Audits. Maann has taken both her master’s degree in Development Communication, and bachelor’s degree in Mass Communication from the University of the Philippines.