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These days, there’s an acronym for everything
Explore our outsourcing glossary to find a definition for those pesky industry terms.
Outsourcing is a $280 billion industry — and it’s an industry in the throes of a (sometimes painful) revolution. The old days of “race to the bottom” labor arbitrage are dead, replaced by a race to drive value. But what does the future of outsourcing look like, and what outsourcing trends are shaping that future?
To answer these questions, we partnered with CMSWire to conduct a comprehensive survey of 488 leaders (68% were C-suite, owner, or partner) whose organizations leverage outsourcing in some capacity. The respondents represent a broad range of industries, with a notable 20% from the SaaS / tech sector, allowing for a deeper analysis of that space.
Our survey results revealed some significant paradigm shifts in outsourcing, as well as practical implications for the organizations that utilize their services. Be sure to check out the full report here.
Let’s dive into some trends in outsourcing that we uncovered.
Cost savings is table stakes in outsourcing, but when it comes to choosing a BPO partner, cost is no longer the primary consideration.
Leaders instead demand top quality service from their outsourcing partners — 86% rated quality service as “critically important” when selecting a provider, compared to just 58% for cost savings (respondents could select more than one answer).
The best outsourcers will continue to provide cost-saving solutions while driving value through high quality service.
Increased emphasis on service quality doesn’t stop at choosing an outsourcing partner — it also extends to how organizations measure the value of their BPO relationships.
Not surprisingly, 59% of respondents identified cost savings as a key metric to measure the value of outsourced services. However, service quality ranked a close second at 51% (again, respondents could select more than one answer).
Quality is clearly important, but what quality means is less clear.
Users selected the factors we consider most closely tied to quality — like low turnover, scalability, and proven ROI — far less than quality itself, signaling significant subjectivity around what constitutes “quality” in the eyes of different organizations. But that’s okay. We’ll continue to explore (and provide!) the factors that translate to great service in a value-centric outsourcing partner.
A staggering 40% reported experiencing higher outsourcing costs than expected in the past year. This challenge resonates across industries — even in the tech sector, where cost savings are not the primary factor for measuring value.
For some organizations, “higher than expected costs” may simply mean they unexpectedly had to scale up their utilization of outsourcing services. But for others, it may suggest a disconnect between costs described in their provider’s contract and the actual costs of outsourcing services.
As you’re inspecting an outsourcing contract, be sure to ask about any additional fees that may apply — what’s included, and what’s considered an add-on that comes with extra charges? What requires a change order? Will you need to submit a change order every time you want to scale up or adjust your strategy? Asking these questions ahead of time will allow you to better align your cost expectations with your provider’s policies.
Despite 45% of respondents being “very satisfied” with their current outsourcing vendors, 73% said their organization is either considering or actively seeking alternative providers.
This high willingness to switch providers demonstrates that organizations are no longer settling for services that simply meet their needs. They know there are dozens of other vendors out there, and they’re always on the lookout for new partnerships that can deliver more value.
At SupportNinja, we’re not satisfied being just another “good enough” BPO provider. We deliver agile, tech-enabled people solutions — and we’ve radically altered the way we do business to provide value at every step.
AI is at the top of almost every “future of work” trends list, so it’s no surprise that it’s now a key component of outsourcing offerings — 78% say their outsourcing vendors have at least some AI capabilities.
The tech sector is particularly eager to embrace AI. Here are a few ways that SaaS and tech showed higher enthusiasm for AI-enabled services than respondents in other industries:
Among respondents who characterize their organizations as "proactive" about outsourcing, 62% report that the current economic climate has “no impact” on their outsourcing decisions. In contrast, only 23% of all respondents felt their outsourcing choices were unaffected by the economy.
What does it mean to be proactive about outsourcing?
It starts with recognizing outsourcing as a tool to drive long-term growth and success, not just a band-aid solution for talent shortages and operational bottlenecks.
Choosing to proactively incorporate outsourcing into your organization’s strategy can save time and headaches down the road. While a reactive approach might leave you scrambling to select a provider and onboard outsourced talent on a tight timeline, a proactive approach ensures that your outsourced teams are up and running before your operations are impacted.
What outsourcing trends will define 2024? Read more.
As our survey results illustrate, the outsourcing landscape is changing. Instead of focusing solely on cost savings, companies are now prioritizing service quality — and they’re no longer settling for “satisfactory” performance from their vendors.
In this market, BPO providers have to take a value-centric approach to outsourcing. And at SupportNinja, we do just that. We demonstrate quality by aligning with your objectives, remaining agile enough to scale with you, and maintaining industry-high talent retention rates.
Want an outsourcing provider that keeps up with the latest industry trends? Contact us today.
The outsourcing industry has entered 2024 during a period of significant growth and change, one that is being shaped by economic trends, technology advancements, and shifting customer expectations.
To understand the impact of the shifting business landscape, SupportNinja partnered with CMSWire and conducted a survey of 488 leaders to understand how these forces are shaping outsourcing decisions, vendor selection, and value measurement.
The results reveal five major storylines that are shaping the state of outsourcing.
Check out the full report here.
There’s no industry that exists outside of the larger economic environment, and as it evolves, so too do the organizational priorities that receive the most focus. The current overall slowdown in the rate of global economic growth has made a value-conscious approach to operations a priority in most organizations.
In light of this, we were not surprised to learn that 78% of respondents said the current economic environment has at least some impact on their decision to outsource (47% reported a minor impact; 31% a major one).
Well-deployed outsourcing has long been a powerful tool for savvy organizations that want to maintain flexibility through changing times, but what might have been considered a fringe approach five years ago has become best practice today.
That evolution is present in the data: 63% of respondents reported an increase in their outsourcing budget over the past year. The range of options for outsourcing is bigger than ever, rising to meet the continuous growth in demand.
In fact, that connects directly with the next major trend we see in the data.
Consider these two outsourcing statistics side-by-side: 93% of our respondent organizations are at least somewhat satisfied with the level of service they receive from their outsourcing partners, but 63% are either actively considering or willing to consider a change to a new provider. What can we distill from these data points?
To us, they tell a clear story about what matters most to organizations, and that story is about value. Loyalty to a specific vendor seems to be less important to companies that utilize outsourcing than the quality of the solution that’s offered.
Our data about priorities ranks cost savings and service quality as nearly neck-and-neck. What does it all mean?
In 2024, companies are open to the possibility of something better.
Rapid innovation in the outsourcing industry means that when a contract is up, there may be an objectively better option out there, and value-conscious decision makers are willing to make the switch as often as is necessary to get the best balance of service and cost.
Finding new ways to scale fast is part of the tech industry’s DNA, so it should be no surprise that 65% of SaaS / tech companies say they have several outsourcing partners who fulfill critical business processes, as compared to 28% of respondents from other industries. For tech companies, outsourcing partners that are built directly into core functions have become the norm, because they grant access to both niche subject matter expertise and the ability to scale up teams quickly in response to rapid growth.
There’s also a strong affinity between the types of services most effectively outsourced today and the areas that tech companies often feel the most pressure to scale — things like customer and tech support, software development, and cybersecurity services. The high value placed on CX in most technology organizations that rely on continuously growing their MRR also means they’re more willing to invest in delivering the best support possible.
The best outsourcing vendors fit together with their tech clients seamlessly, like a jigsaw puzzle, enabling them to focus on growth without compromising their operations.
AI isn’t just a “nice to have” anymore — it’s a key part of the decision-making process when companies select an outsourcing partner. 73% of respondents deemed AI capabilities as either "moderately important" or "very important" when choosing an outsourcing partner. And expectations around how outsourcing partners leverage AI to create real value are rising quickly.
Basic AI capabilities aren’t always enough to differentiate from other providers, especially as AI continues to develop. Most respondents say their outsourcing vendor(s) have basic (41%) or advanced (37%) AI capabilities. This makes sense, because working with an AI-enabled partner is a step toward future-proofing a business or outsourced program. But what matters more and more is how well is AI actually used to deliver outcomes.
We see this trend as a mirror image of data we’ve gathered related to the biggest challenges in outsourcing. When comparing outsourcing options, beware of these common concerns:
This data challenges some assumptions about the outsourcing industry and reinforces others.
Companies continue to see the value of outsourcing, especially amid economic uncertainty.
Value, represented by the balance between cost and quality, is a top priority for many companies.
Most would be willing to switch outsourcing providers under the right circumstances, and many are actively looking to switch in pursuit of greater value.
The tech industry is ahead of the curve when it comes to leveraging outsourcing, but the same growth-focused values that have made tech such a good fit are becoming more commonplace across all industries.
AI is on the rise, no longer a “nice to have” buzzword for an outsourcing partnership, but rather a key differentiator — companies are increasingly scrutinizing how outsourcing providers use AI to create value.
At SupportNinja, we’re excited to be in a space that we believe the data shows is rapidly evolving to favor the type of service and experience we deliver to our clients.
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