Overview of the market for outsourcing services. The pace of development and forecast for 2019
High rates of technology development, the process of globalization, economic instability and the need to optimize resources lead to an increase in the popularity of outsourcing services in the world. In this article we will talk about the trends of this dynamically developing industry in the world and in Ukraine, as well as what should be expected next year from the outsourcing market.
The market of outsourcing services shows significant growth on a global scale in almost all sectors of the economy. The most actively developing IT industry. According to data published by Deloitte, 31% of IT services in 2017 in the world were provided on the basis of outsourcing. Impressive, right? Among the leaders is also the health care and HR sector, where growth last year was 36% and 32%, respectively. Companies also see a significant benefit in the transfer of financial services to third parties, an increase of 30% here. If the industries listed above show such significant growth only in recent years, then the Facility Management market has been developing at a steady pace for more than a decade, and gives an increase of 10-15% annually.
It should be noted that, in general, the industry is not a textbook and develops in spurts, sharply reacting to changes in external factors.
According to SHEN Facility experts, this uneven development occurs for the following reasons:
- Attracting experts for design or one-time work. A significant share in the global structure of outsourcing is occupied by just such services. For example, 43% of industrial enterprises attract external specialists from time to time, but not on a permanent basis.
- Increased need for outsourcing during crisis periods. The use of outsourcing services leads to a tangible optimization of labor costs and other resources, which allows the company to stay afloat.
- The presence of a large number of small outsourcing companies and freelancers. The market of external services is very fragmented, the number of small organizations and individual outsourcing specialists, the services provided constantly fluctuate within fairly wide limits.
- Attracting specialists from other countries and the influence of emigration. Thanks to modern technology, attracting specialists for remote work from countries with lower wages is becoming very profitable. IT outsourcing, remote call centers, marketing research, sales are the main services in this model. There is a reverse option. Let’s say the involvement of highly qualified specialists in the field of medicine for operations, on a remote basis, through modern means of communication. Refugee flows, as low-skilled labor, also influence the market to a certain extent.
As for 2019, the forecasts of global analytical publications are very optimistic, the main drivers of market development will be:
- The development of cloud technologies. According to forecasts, in about 5 years about 80% of enterprises will transfer their activities to cloud technologies, this gives vast opportunities for remote work and attracting third-party contractors, connecting them to a single system with the ability to monitor and control all processes
- Artificial Intelligence. Technology is gaining immense popularity. At the same time, more and more specialists are needed to develop customized solutions.
- Robotization. Such innovations can take away part of the bread from outsourcing companies, since they replace mainly low-skilled labor in production, logistics, etc.
- Security issues will become more acute. The development of cyber security does not keep pace with the rapid technological progress. Here it is necessary to attract additional specialists to organize effective data protection tools.
And what about in Ukraine?
Ukraine is the leader among the countries of outsourcers in Europe. According to Ukrainian specialists, Ukraine provides 90% of IT services on outsourcing principles to other countries. In terms of growth of this segment in the world, we are second only to India. Such activity brings up to 2.5 billion dollars to our country annually.
In the domestic market, consulting, accounting, financial, legal, personnel is developing most actively. Facility management is not yet the most dynamic industry, however, as we already wrote in previous reviews, there are certain positive developments, and next year the positive development trend will continue.
Also next year, further development of the export of IT services and innovations is expected. This year, Ukraine climbed another 7 points in the Global Index Innovation and ranked 43 out of 125 countries.
As for the domestic market, it is necessary to take into account political factors related to the elections, possible exchange rate fluctuations of the hryvnia, improvement of investment attractiveness by the end of 2019 under favorable conditions and changes in the legal field.
In conclusion, we note that Ukraine is a strategically important outsourcing country. Convenient logistics, accumulated IT experience and knowledge, relatively cheap labor, and the urgent need to optimize resources provide the green light for the stable development of outsourcing activities.