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Outsourcing is not a short-lived trend, but a norm in this highly competitive world. Data shows that around 300,000 jobs are expedited yearly by American businesses, with at least one business department being outsourced by more than half (66%) of companies.
We rounded up the most commonly outsourced departments by US business owners, plus their estimated ROI for your future reference.
US companies are future-proofing their operations with outsourcing. Beyond future-proofing, they also want to reduce costs, fill job vacancies, expedite manual and non-critical job functions, and ensure return on investment (ROI) when making big business decisions. Let’s explore them below.
Building an in-house team is an investment, and an expensive one at that. The average cost of hiring in the US is a staggering $4,683 USD per new hire. On top of recruitment expenses incurred from sponsored job ads and comprehensive background checks, companies also shoulder the cost of benefits ($12.19 USD an hour for private sector employees), training ($1,207 USD to $1,512 USD per employee), and turnover ($1,500 USD per hourly employee).
For an in-house team to be fully operational, it needs a dedicated office space, which costs an average of $30 USD to $60 USD per square foot for Class A office spaces, $20 USD to $35 USD for Class B, and $10 to $20 USD for Class C. With office equipment and utilities to top it all off, an in-house team can set companies back thousands of dollars a year.
Outsourcing shifts most of the financial burden from the business owner to the service provider. Business process outsourcing (BPO) companies handle everything, from hiring to training employees for your offshore team.
While employee expertise influences the cost of outsourcing, average salaries for offshore staff in a developing country like the Philippines are lower than local hires. Because of that, companies can grow their team and hire more specialized staff without sacrificing costs.
Despite the decline in unemployment, the US suffers from labor shortages. Whether it’s the increasing rates of early retirement or the promise of a higher income through entrepreneurship, these factors contribute to the unfulfilled 3.1 million job positions in America. Alarmingly, this issue affects all industries, painting a dismal picture of the country’s labor landscape.
As a response to the shortage of labor, US businesses turn to outsourcing. This business practice enables companies to access a global talent pool of professionals who are as skilled and specialized as those from the US. By outsourcing, employers can maintain business continuity, fill job openings, bridge talent gaps, and scale their teams as needed without worrying about inflated hiring costs.
There are many non-core business activities to outsource , including customer service, content creation, and human resources — which can all take up the bulk of your time. But as the saying goes, “time is money.”
By outsourcing non-core and manual jobs, your team’s efficiency and productivity go sky high as they can pool their time and resources on high-value tasks that demand their attention and skills. This prevents delays, quality issues, and employee stress due to an overwhelming workload.
4. Companies Want Sustained Return on Investment (ROI)
Outsourcing is a calculated business risk. As a business owner, you’ll want your calculated risk to be worth your time and money. The ROI of outsourcing is more than calculating your potential cost savings, it is also whether your company is getting other beneficial results from the partnership, including customer retention, operational efficiency, and business agility.
When you outsource to the best BPO companies, you’ll get a sustained ROI in all aspects of your outsourcing journey, from productivity and innovation to revenue and customer satisfaction. Because clients benefit from ROI, they develop long-term partnerships with their service providers and continue availing their services.
Here’s a curated list of departments that US businesses commonly outsource to an outsourcing company. We also included the benefits of outsourcing business functions for each department.
COPC Inc., citing the US Customer Experience Index by Forrester, found that only a small percentage (14%) of companies in the country have provided an excellent customer experience. This is not only rooted in extended wait times due to labor shortage, but also in the growing frustration with low-quality customer support and disconnected customer experiences caused by poor technology integration.
Customer support outsourcing provides US companies with the manpower to handle surges in customer inquiries during peak seasons. With outsourcing partners operating 24/7, American companies can enjoy uninterrupted, round-the-clock support, boosting efficiency amid demand changes. This is why many US companies that outsource customer service rely on offshore teams to maintain consistent service quality regardless of volume spikes.
Outsourcing partners, especially those in the Philippines, have English-proficient employees with neutral accents, making the country an attractive destination for outsourcing voice customer support.
Service providers also understand the human element of customer support. While outsourcing companies provide AI and customer care tools to automate ticketing and streamline customer support on digital channels, outsourced human agents add a layer of personalization and nuance to the customer experience. This means they tailor interactions according to customers’ needs and expectations, which helps address the disconnect between customers and brands.
The US is a global leader in the financial services sector. Despite being a driver of economic recovery during the COVID-19 pandemic and a source of employment for nine million US professionals, the country’s financial services industry grapples with regulatory changes, customer retention, and the unprecedented rise of advanced technologies and cybersecurity threats.
There’s also a shortage of 340,000 accountants due to retirement among most (75%) Certified Public Accountants (CPA), leading to delays and compliance issues. This is where outsourcing becomes a viable and sustainable business strategy.
By having an outsourced accounting department, American companies can work with talented finance professionals and CPAs who can produce financial reports, perform bookkeeping, prepare taxes on deadline, and comply with regulations. Because these professionals are trained in the latest fintech, they can automate manual tasks and deliver data-driven analyses.
While cybersecurity is a concern when assessing the pros and cons of outsourcing accounting and financial services, a reliable outsourcing service provider employs strict data privacy measures to prevent unauthorized access and data leakage.
From Google to Microsoft, the US is one huge tech hub. No wonder America’s IT industry is a huge contributor to economic growth. Unfortunately, with cybercrime causing financial losses exceeding $639 billion USD, keeping up with the latest cybersecurity solutions is a challenge considering the shortage of competent IT professionals. Despite the demand for talent, IT positions remain unfulfilled.
As IT is a fast-paced industry with ever-evolving technologies, American companies are eyeing outsourced IT services to acquire qualified talent and fill open jobs. Whether business owners are offshore outsourcing IT to India, Poland, or the Philippines, these countries have readily available experts who can deliver cost-effective IT solutions, ranging from software development to security analysis.
Because IT needs become complex and sophisticated, the diversity of IT professionals overseas minimizes investment in certifications and training, which add up over time when done in-house. Service providers also employ robust IT infrastructures, helping companies maintain optimal IT operations while cutting overhead costs.
The Society for Human Resources Management (SHRM) found that most (89%) US staff members in human resources expressed pride in their jobs. However, beyond that pride and satisfaction, HR professionals are overwhelmed with workload, forcing them to quit and look for better jobs. According to over half of professionals (56%), staff shortage is the culprit of increased workload.
Although HR departments are deploying AI in talent acquisition (42% of HR staff members) and professional training and development (36%), only very few HR staff (12%) believe this technology is being integrated well by their companies.
Outsourcing HR functions can resolve these issues. By working with an outsourcing company, you can hire HR professionals to alleviate workload and reduce in-house turnover. This gives local staff more room for high-value decision-making and recruitment efforts.
With your offshore HR team’s expertise and knowledge of US HR processes, they can streamline day-to-day workflow and accelerate AI integration without hefty time and financial investment
According to Remote, payroll errors occur more often to employees in the US (26%) than to UK employees. As a result of these mistakes, including late payments, the HR solutions firm found that heightened feelings of stress are experienced by a little over half of American professionals (56%). Remote cited two causes of payroll mistakes: A complicated tax system and a bi-weekly payroll cycle.
In this case, outsourcing payroll to a third party is a great idea. An outsourcing provider employs payroll specialists with keen attention to detail, an excellent grasp of payroll calculation, and intensive know-how of the US tax system.
External providers also integrate sophisticated payroll software to automate attendance tracking and other manual payroll processes, minimizing errors, boosting efficiency, and ensuring compliance with US regulations.
Though thriving, the digital marketing industry of the US is continuously evolving with emerging trends, customer needs, and technologies. Digital marketing teams are not composed of a single role but multiple roles that work hand-in-hand to execute effective marketing campaigns. Unfortunately, the shortage of in-house experts with competent digital skills is one big hurdle for companies.
Without qualified digital marketing professionals, businesses can’t reap the fruits of their marketing efforts, hindering growth and brand visibility. The solution? An outsourced marketing department. Outsourced digital marketers offer fresh perspectives on marketing and content creation, transforming your campaigns from stale to engaging.
With their superb digital skills, outsourced marketers can provide data-driven insights and optimize workflow and content across channels.
Digital advertising investment cost the United States $316.9 billion USD. This investment, combined with increased social media usage and adoption, makes graphic design an attractive profession. However, the higher salary potential in freelancing steers designers from working in corporations, and the cost-effectiveness of hiring outsourced graphic designers drives companies to seek creative expertise in other countries.
Graphic design outsourcing delivers results that go beyond cost savings and reduced in-house workload. You can tap into the creative minds of outsourced design teams, opening yourself to innovative perspectives on visual design — which results in elevated, on-brand designs that captivate, engage, and retain customers.
Service providers also support other design services, such as motion graphics, web design, 3D design, and many more. Whether it’s a new logo or visually cohesive graphics, you can meet any design need with creative services outsourcing.
The Nashville Health Care Council says Americans hold a negative perception of the US healthcare system. There’s a deeper reason for this, though. In addition to ballooning healthcare costs, healthcare organizations are experiencing workflow and revenue management cycle inefficiencies, cybersecurity threats, medical bill errors, and staff shortages. To improve service quality and efficiency, organizations resort to outsourcing healthcare operations.
Healthcare BPO companies can handle most healthcare services, such as medical billing, data entry, revenue cycle management, appointment setting, claims processing, and customer service. All these translate to improved operational efficiency, higher quality patient care, and fewer billing errors.
Amid pandemic-induced disruptions, real estate remains a resilient, volatile industry as regulatory changes, political instability, housing shortages, high vacancies, and technological innovations shift market dynamics.
Unfortunately, the challenges don’t end there. Errors in financial reports, lackluster lease management processes, and America’s complicated taxation system hinder workflow optimization and long-term success.
Outsourcing real estate to a competent service provider does wonders for real estate companies. Hiring real estate VAs can speed up the creation of property listings and entry of client information in databases, whereas a mortgage processors can streamline loan processing by organizing financial documents and reviewing credit reports of loan applicants.
Thanks to outsourcing, your real estate firm can ensure regulatory compliance, reduce errors, close more leads and deals, and gain a competitive advantage in the industry.
Online shopping is the cornerstone of everyone’s lives, with 274.70 million Americans purchasing products online. While retail and e-commerce have made shopping more convenient, the industry is barraged with challenges, ranging from maintaining profit to navigating complex market shifts brought by AI and evolving buyer preferences.
To keep up, brands outsource retail and e-commerce functions, such as lead generation and product writing, to an outsourcing provider. Outsourced retail and e-commerce professionals can enhance your loyalty programs, craft product descriptions, process orders, and many more.
As a result, brands can increase their revenue, improve their social media presence, and grow and retain their customer base.
Companies want ROI on their outsourcing efforts, and it all comes down to the cost of your investment versus the value it provides to your business. Here, “value” pertains to not just cost savings, but also other measurable and intangible benefits such as customer satisfaction and retention.
However, the cost of outsourced employees, quantity and seniority level of staff, service fees, location, revenue, and other factors add a layer of complexity in calculating ROI. Hence, it’s important to assess your goals, establish a clear project scope, and plan your workforce, so you can manage your expectations and make an informed decision before outsourcing job functions.
Let’s say our US-based client spends $6,000 USD a year on overhead costs. They want to hire more staff, but with the high labor costs in America, they decided to cut costs and outsource their department to a BPO company in the Philippines with a service fee amounting $12,000 USD a year. Below is the estimated ROI (in terms of cost savings) for each outsourced department.
Outsourcing changes the way modern workforces operate. Whether you want an outsourced IT department or a creative team, KDCI Outsourcing can give your business its much-deserved ROI, from cost savings to increased brand engagement.
Ready to enjoy long-term success? Start building your offshore team today! Contact us for an inquiry or a price quote.
