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How Outsourcing Will Affect The Economy?

How the economy will be affected by outsourcing

In recent years, outsourcing has become one of the most discussed subjects in business circles. With the rise of digitalization in business, physical presence in the workplace is becoming less necessary. In addition, as the old school office spaces are losing their cultural relevance, companies realize they don’t need to compete with other businesses to hire local talents.

An estimated 300.000 positions are outsourced every year from the U.S alone, and 59% of businesses use outsourcing to reduce their expenses. With numbers as high as that, it is no wonder that outsourcing has a significant impact on the global economy. 

Why Do Companies Outsource Talent?

The answer to this question may vary from company to company, but one of the top reasons for the popularity of outsourcing is its cost-efficiency. 

Having an in-house team can be much more costly than hiring offshore talent. Hourly rates being more affordable offshore is a part of the equation; however, that’s not the only issue. An in-house team will need extra office space and equipment that you will be responsible for purchasing and maintaining. Not to mention that the hiring process for these employees can be long and arduous. 

Another main reason for outsourcing is the global lack of talent in certain professions, such as software development, while the need is constantly increasing due to digital transformation. For example, as many as 39% of employers have reported a shortage of talent in the fields of system developers and system administrators. 

So, companies handle this challenge by outsourcing software development as a reliable solution for getting the job done in a stress-free and time-saving way.   

The Impact of Outsourcing on The Economy

Technology, including digital services, software, and software-based services, is leading the economy globally. Accordingly, the trend of outsourcing tech talents is changing the game, requiring companies to adapt to the new economic environment. 

In earlier decades, technology became a part of the business world with the need for a website and digital presence. However, digital transformation rules how we do business now, and the demand for experts in tech is drastically increasing. 

Companies are outsourcing talents to achieve their digital transformation goals. To state more clearly, by partnering with these providers, companies maintain cyber security, build apps, and go digital and agile without a considerable investment. There is no doubt that these services are mandatory in today’s business world and require quite a lot of attention to get the maximum benefit from them.

With a handy outsourcing strategy, the companies save their budget on tech and create big waves in the global economy. Even though unemployment seems to be the most significant unintended result of outsourcing in the economy, we can also interpret this situation as a shift in employment models. 

The professionals with experience and talent don’t want to limit their potential within a company. Instead, they want to expand globally and join the global economy. As a result, the cost of acquiring a good service may increase. However, it’s still more budget-friendly than hiring teams in-house. Because companies pay an hourly or a project-based price, they spend money on tech services only as long as they need them. 

Main players in the outsourcing

Outsourcing benefits two main groups. The first group is smaller countries and countries with developing economies. While they have a large pool of talented workers, their local economy might not have the infrastructure or the resources to acquire their services. 

As a result, qualified workers in these countries can sell their outsourced services for more money than their local economies would allow. This results in the growing impact of these countries on the global economy. The physical boundaries in employment are disappearing, and professionals in developing countries are increasing their chances of getting satisfaction in their careers. 

The second group is enterprise-level companies with talented teams offering world-class service. These providers act as a limb for their clients to contribute to their tech needs. Therefore, companies that get their support can access all devices, tools, and talents these providers offer.  


The economy has a mind of its own, and few can predict the exact impact of outsourcing on it in the long run. So the best you can do is analyze the current data and have an educated guess on what might happen. 

Like any other business practice, outsourcing is a complicated subject with its own set of pros and cons. We will have a better grasp of its effects in the near future. But until then, it remains a reliable source of help for companies who can use an extra hand.