The future of outsourcing: Labor challenges will mean more remote work and automation

by Ryan Plank
the future of outsourcing

The future of the outsourcing industry remains bright after wrapping up 2021. While the last year was another strange year given the ongoing concerns over COVID-19, it also saw areas of tremendous growth, opportunities to explore new operating models, and lots of encouraging adaptation. Despite the need to balance safety and client needs, there was still plenty of room for providers to thrive.

As another new year begins, many outsourcing businesses are excited for continued growth in 2022. But what’s in store for this year? Will the outsourcing industry be able to continue its forward momentum over the next 12 months?

We’ve talked to industry experts and analyzed trends in hopes of understanding what to expect over the coming year. Here are our predictions for 2022.

Prediction #1: The talent war continues

the great resignation

Finding and keeping talent was even more difficult than usual for the outsourcing and BPO industry in 2021. Health concerns, quarantine measures, economic pressures, and remote work all contributed to historic labor shortages. That trend is likely to continue through 2022, but not just because of COVID-19.

Since the onset of the pandemic, workers across many industries around the world have been reevaluating their relationship with work. The result has been a global shift in the way that people look at how work fits into their lives. Workers are not only prioritizing their families, mental health, and work-life balance, they’re also demanding wage increases, asking for better benefits, and choosing to leave industries altogether if they don’t feel they’re being treated well.

It’s a phenomenon that led to The Great Resignation in the United States, where record numbers of workers quit their jobs in 2021. Odds are that what happened in the U.S. in 2021 will continue to reverberate around the world. Even if the effects of the pandemic begin to fade away (which is in doubt since the discovery and surge of the Omicron variant), there are likely to be long-lasting impacts on the global labor market.

The problem for business process outsourcing, and the outsourcing industry as a whole, is that workers are spoiled for choice right now, and it looks like they will be for the foreseeable future. With so many options and such a hot labor market, outsourcers aren’t just competing against other local outsourcing providers for talent. They’re also competing with any firm around the world offering remote work, as well as other industries that are willing to meet the needs of prospective candidates.

In 2022, only those that adjust to the market’s demands will win the war for top outsourcing talent.

Prediction #2: Remote work keeps booming

remote work plan template

Providers can expect remote work to continue booming this year.

By the time the calendar rolled over to 2022, the outsourcing world had nearly two years of experience with the widespread remote work that started at the beginning of the COVID-19 pandemic. During that time, outsourcers have overcome the initial challenges of switching to remote operations and begun to perfect the infrastructure needed to remain effective while staff works from home. The outsourcing industry’s ability to execute while allowing staff to work from home (or anywhere) will only improve over the coming year.

On top of that, remote work is now in high demand for staff. Having the flexibility to work remotely is a major demand of the millions of people looking for their next outsourcing opportunity. It’s going to be a huge factor in the war for talent that we mentioned earlier. But it’s also something that most current workers want to keep, even when offices reopen in their area.

According to a survey from Buffer, 94% of people that started working remotely for the first time at the beginning of the pandemic responded that they want to continue working remotely, at least part of the time, for the rest of their careers. Although many companies will be itching to get staff back into the office as soon as possible, workers will continue to push for the flexible work environments that they’ve become accustomed to during the pandemic.

Prediction #3: Clients open up to working with remote outsourcers

Outsource remote work

As outsourcers react to the labor market’s demands for more remote work options, clients will have to as well. Where 2020 brought hesitancy (and even refusal) by clients to accept remote outsourcing operations, there was a subtle shift in 2021. In 2022, outsourcing clients will adapt and embrace the new, more refined remote workforces that have evolved since the pandemic.

If you’re looking for evidence, consider that the ISG Providers Lens Quadrant Report for Contact Center and CX Services has added a “Work From Home Services” category to their rating systems.

Of course, this increased adoption will have compliance and technology implications that will impact SLAs. Remote outsourcers can expect much more open-minded reception when it comes to negotiating SLAs with clients, but they should also be prepared to demonstrate both their effectiveness and their ability to maintain security in a remote setting.

The new remote infrastructure that makes this all possible involves both new and existing technologies that have become essential methods of reassuring clients of the effectiveness of remote outsourcing. These systems, many of which were an afterthought for onsite outsourcers, will become necessary tools of operation for many remote outsourcing operations.

Prediction #4: Omnichannel and automation become standard…

omnichannel contact center

Speaking of technology, omnichannel and automation are on a fast track to become outsourcing mainstays in 2022. Things like robotic process automation (RPA), artificial intelligence, machine learning, and big data analytics have advanced to the point of being essential differentiators for outsourcers looking to gain a competitive advantage.

Both omnichannel and automation have been trending up for a while now, so this prediction isn’t exactly shocking, but the events of the last few years have accelerated the widespread adoption of these technologies in a way that will really start to shine in the coming year. A recent study found that 93% of organizations are considering or have already adopted cloud services to improve outsourcing and 83% of financial companies and institutions are implementing or considering implementing robotic process automation.

One of the more telling indicators of this growing trend is the widespread nature of its implementation. Cloud computing, RPA, and other forms of automation are likely to go beyond the fringes of in-house business processes and become core business features of outsourcing contracts in industries like healthcare and IT services.

The advancements in omnichannel and automation technology have been big, but the pandemic (and specifically the early days of strict lockdowns) also provided a great trial run for customers. Customers become much more accustomed to things like chatbots and systems of automated online interactions than ever before.

In addition, the need for automation has grown alongside the shortage of outsourcing talent. As the competition for outsourcing staff continues to heat up, so will outsourcers’ and clients’ willingness to use omnichannel and automation technology to offset the labor deficit.

Prediction #5: Outsourcing continues its expansion across the globe

outsourcing philippines

With a red hot job market, remote work boom, and technological advancements, the outsourcing industry is due for expansion in 2022. The difference in this year’s prediction is that the growth in the outsourcing industry is most likely to happen away from the typical outsourcing hubs like India and the Philippines.

Thanks to a digital transformation, the growing popularity of remote work, and the shift of the outsourcing talent pool from local to global, new and emerging markets for outsourcing will have the opportunity to flourish in 2022. South Africa provided a great example in 2021 as both industry leaders and politicians worked together to accelerate the region’s BPO growth.

Burgeoning outsourcing destinations like Ireland and Egypt will be able to continue their growth in the new year, along with new players yet to establish themselves. Outsourcing companies in Bulgaria, Romania, Colombia, and Poland have a chance to capitalize on global talent migrations and overcome some of the labor challenges they’ve had in the past.

Outsourcing news outlet Inside Outsourcing wrapped up the calendar year with more news signaling global expansion:

The point? It’s a great big world out there and there’s plenty of room for outsourcing to grow into it.

Prediction #6: Gig work finds its foothold in the outsourcing industry

the gig economy

Our penultimate prediction for outsourcing in 2022 is another trend that will become popular as a way to mitigate a talent deficit: gig work.

The gig economy was growing before the pandemic, continued growing during the pandemic, and will continue to grow even further in 2022. The World Economic Forum has called gigging the Fourth Industrial Revolution and predicts that it will transform the global economic framework. In 2022, it will become a trusted source for top-tier providers in the outsourcing industry.

Although gig working isn’t brand new, the current climate in outsourcing is a golden opportunity for gig work to mature in the coming year. A historically hot labor market, the growing prevalence and acceptance of remote work, and serious advancements in technology are the perfect storm for Enterprise outsourcers to embrace the benefits of gig work in 2022.

The idea of sourcing gig work talent to manage business functions could be a major win for startups and small businesses in the coming year as well. Entrepreneurs that have never considered the idea of offshoring will now be able to take advantage of the managed services ecosystem and reap the benefits of outsourcing, even if only on a short-term basis.

Industry news outlet HFS Research has previously covered Concentrix Solv, Wipro’s Topcoder, and Q2 HFS Hot Vendor LiveXchange as examples in the IT and BPO spaces. Expect them (and others) to have many more examples to come in 2022.

Prediction #7: Powerful forces combine

bpo companies in the philippines

Finally, we believe that more blockbuster mergers and acquisitions are in store for the next year (and beyond).

In 2021, global CX products and solutions provider Sitel Group made a $2.2 Billion splash in the outsourcing pond when they acquired Sykes Enterprises, Inc. Bringing in Sykes, a full life cycle provider of CX management services, multichannel demand generation, and digital transformation around the globe, makes Sitel Group a top-three CX leader in the world.

With more than 160,000 employees across locations in 40 countries, serving 700+ customers in 50+ languages, the newly merged company was projected to hit revenue around $4.3 billion in 2021.

That type of projected revenue is astronomical and is likely to serve as a seriously desirable point of aspiration for the industry. Any other outsourcing providers in the top 10 or 20 will begin examining their operations and looking for potential service gaps to fill through acquisition in an attempt to fault into that stratospheric class of revenue generation. Expect more headlines about industry giants joining forces to create global behemoths throughout 2022. 

What did we miss?

Of course, 2022 is sure to bring lots of surprises that even our crystal ball can’t foresee. What do you think will be the biggest news for the outsourcing industry this year? What did we miss?

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