After a turbulent and unpredictable 2021, the COVID-19 pandemic is still impacting company operations and consumer behavior all around the world. After the initial shock and disruption, the outsourcing industry has stabilized and adapted to the challenges presented by changing global circumstances. As the medium-long term effects of the pandemic are starting to become clear, significant trends are beginning to emerge, presenting opportunities for both outsourcing providers as well as clients.
While it’s not an exact science to predict what 2022 will bring, we at Mortoff Consulting have compiled all our observations and knowledge, to bring you the top 5 trends in the world of outsourcing, expected to shape the industry next year.
1. The global talent shortage is only beginning
The pandemic has led to an unprecedented shortage in labor, across all skill levels and most industries. The technology industry in particular is struggling to hire enough people with a significant increase in unfilled open positions. There seem to be several factors driving this shortage at the moment:
- Major changes in working conditions (WFH arrangements, lockdowns, staffing cuts) prompted a significant number of people to either accelerate their retirement plans, or switch industries
- Lack of childcare options during lockdowns forced a lot of mothers to become full-time carers
- Increased demand for IT services due to remote work becoming the norm
- Graduation rates have decreased due to virtual classes or education being put on hold
The talent shortage has a significant impact on company productivity, as well as the cost of labor, due to increased compensation demands by employees. With both of these pressures impacting the bottom line, addressing the shortage becomes high priority for all companies. A carefully selected outsourcing partner can quickly help fill this gap.
Trend: An increased demand for outsourcing companies to bridge this gap is expected to continue into 2022. If you are looking for an outsourcing partner, it is best to act quickly to ensure you secure adequate capacity for your company.
2. Flexible working arrangements are here to stay
The verdict is in - remote work is becoming the new normal. By now, employees have made it abundantly clear that they prefer working from home partially, if not entirely. Especially in the tech industry, people now expect a level of flexibility in their working conditions. Companies have also started to adapt, widening their recruitment pool with location-agnostic hiring - the practice of hiring fully remote workers from other regions or even countries. This presents companies with an opportunity to manage labor costs and recruit sufficient talent by tailoring their recruitment locations. These practices can be complemented with a flexible outsourcing arrangement to provide a solution to rapid shifts in demand, fill the cultural gap and widen the pool of available talent.
Trend: Outsourcing will play a large role in solving the unique challenges presented by shifting working conditions, and can serve as a counterpart to new location-agnostic hiring practices.
3. Startups and SMEs turn to outsource
Outsourcing is no longer the large enterprise’s solution. According to surveys, over half of small-medium enterprises are using outsourcing or nearshoring to fulfill one or more functions in their business. Startups in their early growth phase have also started using these arrangements, allowing them to focus on their core products and scale with ease.
The most popular functions outsourced by SMEs and startups:
- Financials & Accounting
- HR & Recruitment
- Payroll
- Marketing
- Customer Service
Outsourcing one or more of these functions allows small businesses to focus on growth & critical tasks, decrease workload and gain access to expertise that might not be readily available.
Trend: More and more SMEs and startups are seeking outsourcing partners, choosing vendors that cater to these market segments and understand their needs.
4. Continued Central & Eastern European expansion
For the past couple of years, Central & Eastern Europe has experienced massive growth in the number of outsourcing vendors and the volume of engagements. According to Deloitte, in 2016, over 65% of companies have chosen a European location to outsource their functions to; this number has only increased since then.
The CEE region has played a significant role in this expansion due to its affordability and a highly-skilled talent pool. Outsourcing business functions to CEE provides resources with higher English proficiency and better cultural fit for many organizations. Resources in this region are viewed as more invested, collaborative and innovative. Hungary, for example, is consistently rated in the top 10 countries for software developers globally.
Trend: Outsourcing companies in the CEE region like Mortoff continue to provide access to an unparalleled pool of skilled & affordable resources
5. Outsourcing vendors focus on high-tech tools & outcomes
Outsourcing partners are modernizing their tools to remain competitive. By employing state-of-the-art technology, these vendors can provide better value to their clients.
The key technologies that outsourcing vendors are focusing on right now:
- RPA - Robotic Process Automation allows providers to automate internal & external processes, leaving more capacity for critical tasks that require human interaction
- Cloud collaboration tools - allowing more efficient communication with clients
- AI tools - custom, process-specific tools developed to provide further value
- Cybersecurity - more important than ever, high-level security is an absolute must-have when dealing with sensitive client data
Providers are also moving away from KPI-based contracting. By focusing more on the desired outcomes, rather than arbitrary metrics, outsourcing providers are able to tailor their service to each client and remain flexible in the face of challenges.
Trend: Best-in-class outsourcing providers are focusing on innovative solutions in their business to increase value to clients. These providers are also moving to an outcome-based contractual model.
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