With more end-use industries turning to business process outsourcing than ever in the last few years, it should be no surprise that this trend continued throughout 2021, despite the business interruptions of the pandemic. In fact, it could be said that businesses being forced to operate lean and increase their agility having to rely upon service providers to fill in the gap was a primary driver of growth that brought the business process outsourcing industry to a valuation in excess of $245 billion in 2021.
As a platform that facilitates and supports business-to-business relationships, it is important for our team at UpCity to help our community better understand the outsourcing habits of small businesses in order to understand how successful organizations are structuring business strategy moving into 2022. We recently gathered our own data through a Pollfish survey of 600 respondents across the United States and Canada, querying both business owners and employees on how their organization determined which processes to outsource.
Our inquiry was designed to explore the budgets and resources dedicated to outsourcing process management, what benefits and challenges startups and small businesses face in the process, and what to consider in the decision-making process when choosing which service providers they felt comfortable contracting. We also determined whether small businesses were going far afield geographically for outsourcing or sticking to local choices. Finally, we explored how small businesses structured their outsourcing relationships in their communications and workflow.
Our findings will address the following aspects:
- Small Business Outsourcing Statistics: Factors, Traits, and Benefits
- Geographic regions
- Industry results
- Outsourcing Communication Methods
To round out the insight from the field, we’ve also queried business owners who outsource in a general sense their own experience with business process service providers. We’ve included some of the best insights from the business landscape that are illustrative of small business experiences in outsourcing and working with service providers.
Small Business Outsourcing Statistics: Factors, Traits, and Benefits
35% of Small Business Having Been Outsourcing a Business Process for 1-2 Years
While outsourcing isn’t a new practice, and previously discussed numbers don’t indicate a significant influence from the pandemic on budgets dedicated to outsourcing, our survey does reveal that a significant percentage of organizations have only been outsourcing for the last two years. With additional data showing 31% of businesses outsourcing for the last 3-5 years, we feel comfortable saying that many organizations have found that outsourcing is a strategically viable method for increasing and expanding their operational ability to pivot and adapt to changing consumer demands without the expenses of growing their team.
Years working with an outsourced team:
• 35% – 1-2 years
• 31% – 3-5 years
• 14% – Less than 1 year
• 12% – 6-9 years
• 8% – 10+ years
82% of Small Businesses Have Increased Business Process Outsourcing Post-COVID-19
With only 18% of our respondents not increasing their business process outsourcing post-Pandemic, it’s an interesting trend to consider given how few of our respondents changed their outsourcing budgets from pre-Covid to post-Covid expenditures. For those that didn’t increase their budget, we can only assume that they widened the number of services being outsourced, or growth brought them into a new category, allowing them to grow staff internally but outsource other services.
Seeing the trend in small businesses increasingly turning to process outsourcing post-COVID, we wanted to see if this trend held out in the community at large, and so we asked business owners and staff to weigh in on why they increased their outsourcing efforts in the wake of the pandemic, with the option of sharing as well what types of services they are outsourcing.
“While starting a new firm, you may struggle to determine the appropriate level of work and ability required to manage it effectively. In such cases, you may wish to outsource your back-office functions. Business process outsourcing firms deliver high-quality back-office services quickly and affordably. This is one of the reasons for their popularity. One area where outsourcing could be critical is customer service. Not all small businesses can give customer service 24 hours a day, seven days a week. Outsourcing customer service reduces your work and eliminates the need to create a new department in your organization.”
—Shad Elia, CEO, New England Home Buyers
“I like to use professional outsourcing services as an expert. Accounting, legal, purchasing, IT assistance, and other specialized services are all included. Because of the potential cost savings connected with this type of arrangement, this is the most typical area for these types of services. The company gets access to high-quality resources while just paying for the services it uses. The organization’s overhead costs are significantly reduced as a result of this.”
—Mark Valderrama, CEO & Founder, Aquarium Store Depot
“We outsource bookkeeping because I find it difficult to manage our bookkeeping in-house, especially with how much I handle in my plate currently. This is why when I found an agency that provides this exact service, I was really enthusiastic as this could save me a lot in terms of productivity. My major problem back then was the huge backlog in my books, brought about by procrastination. We found ourselves increasing outsourcing post-COVID because whenever I try to assess the situation, I see more practical advantages to outsourcing rather than doing the actual job itself as I find it time-consuming on my end.”
—Dominic Harper, Founder, Debt Bombshell
“Every organization has its own needs, and outsourcing can be an excellent approach to streamline the difficult tasks in the workplace. As an entrepreneur, I outsource accounting services because I believe accounting is a complex task in business that requires a deep understanding of financial matters. I continue to use outsourcing in the post-COVID period since it assists me so much.”
—Tyler Garns, CEO & Founder, Box Out Marketing
83% of Small Businesses Are Planning to Further Increase Business Process Outsourcing in 2022
A challenging economic landscape and evolving customer experience demands are driving not only more businesses than ever in considering business process outsourcing, but also pushing more businesses to expand their existing outsourcing efforts. From our community of 600 respondents, we found out that an overwhelming majority planned to increase their outsourcing in the coming year.
• 83% – My team and I are considering it
• 11% – My team and I have no plans to increase our outsourcing efforts
• 6% – Unsure at this time
20% of Small Businesses Used Referrals to Find an Outsourced Team
Great news for communities like UpCity and others that help facilitate B2B relationships, we’re seeing a trend in referrals and online marketplaces as being primary sources used by SMBs to identify the right outsourced teams to meet their business needs. Social media rounds out the top three sources, with Google and advertising making up a good portion of the remaining sources on the list. It’s important when looking for a service provider to consider multiple sources to get the clearest picture of what a service provider might bring to the table for you.
Overall breakdown:
• 20% – Referrals
• 19% – Social media
• 17% – Online marketplace
• 15% – Online advertisement
• 15% – Google search
• 12% – Online forums
• 2% – Other
“I’m surprised that referrals didn’t account for a higher percentage. Given the size and complexity of the outsource call center market, I would have expected business owners to rely more heavily on trusted colleagues to help sift through the options.”
—-Corey Kotlarz, President and Founder, Outsource Consultants – BPO Advisory Firm
93% of Small Businesses Have Had Positive Experiences Working With an Outsourced Team
While many business owners might still hesitate to outsource to a service provider, it’s important to know in making that decision that out of our respondent pool, only 7% had a mostly negative experience with a provider. That means that overall, the majority of respondents not only found value in outsourcing business processes but also found the experience to be overall positive, citing any number of benefits resulting from the arrangement.
21% of Respondents Say That Greater Flexibility Has Been the Most Positive Aspect of Working With an Outsourced Team
One of the advantages that has come out of business outsourcing is exactly what businesses need right now in order to adapt and respond to consumer behaviors, and that’s increased flexibility. Rounding out the top three benefits are increased work efficiency and gaining access to additional resources, both crucial in expanding on an organization’s ability to pivot and respond to changing business requirements.
• 21% – Greater flexibility, helps businesses adapt quicker
• 19% – Increased efficiency
• 16% – Increased available resources
• 11% – Frees up employee’s time for other projects
• 10% – Receiving help and guidance from an expert
• 9% – Better risk management
• 7% – Cheaper than hiring in-house
• 6% – Better tax breaks
While the survey broke out increased efficiency and freeing up employee time for other projects, these two benefits are actually very much related. The more projects your team can tackle due to more resources and manpower with their hands on various projects, the faster work will be completed. This goes for the guidance from experts as well, as the insight gained from professionals in certain work processes can over time improve your team’s ability to complete more complex jobs faster. All in all, the benefits that emerge from business process outsourcing, then, seem to revolve around your business conducting day-to-day operations in ways that make it overall more profitable.
From the insight gained in our inquiry, we decided it would be helpful to pull in more feedback from the business community at large regarding the benefits of working with an outsourced team.
“Outsourcing is an innovative, cost-effective way for businesses to undertake core activities like accounting, marketing, IT & service delivery. In fact, our clients report a 60% cost saving by outsourcing these core business functions and achieving business growth faster than otherwise would be possible.”
—Muhammad Asif, Managing Director, Valenta AI Canada
“I believe outsourcing enables organizations to focus on their core offers rather than on non-core operations. For instance, when a payroll accountant is outsourced, the business is relieved of the responsibility of monitoring his or her performance. Rather than that, it might direct its efforts toward emphasizing its company differentiation and increasing overall growth. As a result, these measures can help a business improve its competitive edge and its relationships with the value chain. Finally, the business can benefit from higher customer satisfaction and profit margins.”
—Adam Wood, Co-Founder, RevenueGeeks
“A single IT employee, no matter how good she is, just does not have the essential resources that an IT firm does. Of course, he or she can suggest third-party software, services, and technologies that would be relevant to your company, and this knowledge can be really beneficial. An outsourced technical support staff, on the other hand, can not only recommend but also provide services and assistance that can help your business run more smoothly and quickly. An IT firm typically has its own servers as well as a variety of other services and support that you can use as your company grows.”
—Mark Osborne, Managing Director, Windows Doors UK
23% of Respondents Say That High Cost Was the Biggest Challenge of Working With an Outsourced Team
The next question in our survey might reveal some insight into some of our respondents not considering outsourcing as an option and how some have expanded their outsourcing without modifying their existing budgets. When asked what the biggest challenges to outsourcing to a team have been, the majority claimed that the costs are too high, with communication challenges being the next on a list of drawbacks that largely revolve around the work habits of service providers. Of note in the list are concerns over data breaches, a growing concern across all industries.
“This doesn’t surprise me, as I consistently see buyers make decisions based on pricing offers that are not apples to apples. To significantly reduce the probability of a sabotaged business case, we suggest thoroughly defining the pricing parameters as part of the bid request. It’s critical to understand key components such as is the pricing per staffed hour or productive hour, is support staff included, and if so, at what ratios? Are there any additional one-time or recurring costs you should expect from the sourcing partners? Spend time with your potential partners during the sales process and ask for references, get to know their culture to the best of your ability.”
—-Nick Mannella, CRO, Helpware
• 23% – Cost was too high
• 21% – Difficult to communicate with
• 14% – Failed to meet deadlines
• 12% – Didn’t follow instructions
• 9% – Lack of confidentiality
• 9% – Low quality work/services
• 8% – Data breach
• 5% – Other
When considering the other challenges such as a failure to meet deadlines or concerns over the quality of the final output not meeting instructions or expectations, many of these concerns can be addressed at both the contractual level and throughout the engagement of services. Proper channels and pre-agreed upon communications methods combined with a clear and concise service level agreement to outline deliverable requirements will protect all parties. When it comes to data security and confidentiality, there are tools that a service provider must have in place in order to realistically act as a service provider in the modern era that help them protect and safeguard client data. Combined with proper security-focused access protocols and crisis response planning, a service provider should be able to mitigate or at least minimize the impact of a security event.
It’s important to have a full view of the challenges faced by companies outsourcing from a boots-on-the-ground perspective, so we asked business owners at large what some of them have faced in the way of challenges they’ve faced in outsourcing.
“The lack of understanding of post-contract processes and decision rights is the most common problem in outsourcing implementations. Simply put, after contract signature, clients and service providers are not operationally equipped to collaborate. As a result, services aren’t delivered, implementation efforts stall, client stakeholders and service provider employees become angry, and the entire timeline for delivering projected business advantages is pushed back.”
—Jay Bats, Co-Founder & Developer, ContentBASE
“When organizations outsource their web development projects to companies in other countries, they encounter a number of obstacles, including language differences and communication issues. It’s possible that you’ll encounter people who speak a different dialect than you are used to. This was a problem we ran upon in the course of outsourcing work. Workers prefer to discuss things and have a clear idea of what has to be done when they are all in the same place. Some things might be assumed to be part of a company’s service if remote developers are located in different time zones. This further complicates the task of conveying expectations.”
—Ernests Embutnieks, CEO & Founder, Wolf of Desk
“The absence of buy-in from senior client leaders who will be receiving outsourcing services is a significant issue in many outsourcing deployments. This can lead to active or passive resistance to the entire outsourcing paradigm, as well as a desire for special treatment or opting out of outsourcing services, resulting in a weakening of the business case. Leaders who will be receiving future services frequently do not actively engage in outsourcing evaluations or receive proactive notifications about their status. This lack of involvement has two negative consequences. First, the person getting services is usually unprepared for the changes that are about to occur. Secondly, the evaluation and negotiation team may not properly represent or comprehend the unique services provided by a specific organization unit.”
—Gerrid Smith, Chief Marketing Officer, Joy Organics
Most Respondents Noted That Increased Efficiency is The Most Important Benefit When Outsourcing a Business Process
Knowing what benefits our respondents found in business process outsourcing, we provided them the chance to rank those benefits in terms of importance. It should not be a surprise that the most often named benefit of outsourcing would also be considered the most important of those benefits. Relatively, increased available resources and more free time for your employees are also fairly equally ranked.
(On a scale of 1-8, 1 being the most important)
Increased efficiency
Increases available resources
Receiving help and guidance from an expert.
Greater flexibility, helps businesses adapt quicker
Cheaper than hiring in-house
Frees up employee’s time for other projects
Better risk management
Better tax breaks
Most Respondents Say That Strong Problem-Solving Skills is the Top Trait They Look For When Choosing an Outsourced Team to Work With
When creating an impactful and effective marketing campaign, one of the top elements marketers focus on is messaging that shows potential clients or customers that your service or product solves a pain point for them in a way no other product or service can. This carries over into the services provided by outsourced business process agencies and service providers. The ability to come at the challenges faced by their clients in unique and innovative ways that help maximize profitability is paramount to a service’s ability to stand out from the crowded landscape.
(On a scale of 1-7, 1 being the most important)
Strong problem-solving skills
Years of experience
Easily reachable
Affordable pricing
Good time management skills
Positive online reviews/testimonials
Examples of previous work
With all the benefits and challenges involved with outsourcing, we wanted to gain more insight into the process businesses use to decide which service providers to work with and what traits seem to drive the decision forward or lead them to search elsewhere.
“When choosing an outsourcing provider, it’s assumed that they’ll take care of everything from the ground up. There should be no room for poor or bad work. Selecting a responsible outsourcing partner to manage projects, such as Tatvasoft, is a must-have because you will need to do less oversight on the task. This way, you’ll have more time to focus on your main business functions.”
—Dan Close, Founder & CEO, We Buy Houses in Kentucky
“When outsourcing digital marketing, it’s critical that the SEO specialist you select has experience working with numerous departments inside your company, including IT, marketing, customer support, and sales. If the SEO service provider does not communicate properly with the members of these teams, progression will be challenging. This is one of the reasons why an increasing number of firms are turning to SEO purchasing agents, who link companies with the expertise they want. When it comes to dealbreakers, a poor track record, a lack of due diligence and analysis, as well as a bad cultural fit or all red flags for me.”
—Abe Breuer, CEO & Owner, VIP To Go
“We usually look for the combination of resources and technology and the price and ability to meet deadlines. The biggest red flags we look for are no sample work or no clear roadmaps. In order to win your business, potential development partners need to see your portfolio. A company that claims to have the experience with what you want, but is unable to share any details, should be a major red flag.”
—Angus Chang, Co-Founder & Director, iupilon
69% of Small Businesses Don’t Plan to Outsource Any Business Processes in 2022
As popular and widespread as outsourcing has become, it’s still not a standard across significant portions of most industries. 69% of small businesses that responded to our survey that don’t already outsource business processes in some way have no plans to do so in 2022. For those that do, the list of services they intend to outsource hold to previous lists, with the exception that Customer Service has come up in standing and takes the place of IT Services as a sought-after service.
• 69% – I don’t plan to outsource any processes
• 6% – Accounting
• 6% – Digital Marketing
• 4% – Customer Service
• 4% – Recruitment/Human Resources
• 4% – Virtual Assistant
• 3% – IT Services
• 3% – Development
• 1% – Other
82% of Small Business Owners That Don’t Outsource Business Processes Also Don’t Plan to Hire a Freelancers
Often used as an alternative to fully outsourcing a business process, businesses will often bring in freelancers for one-off assignments and other projects that can be managed in-house but might need additional hands or expertise to complete. Our survey results, however, show that businesses not considering business outsourcing have also effectively ruled out freelancers as an option for expanding their workload capacity. For those few that are considering freelancing support, the areas where they plan to bring in support match up with the business processes others are leveraging more advanced means of support.
• 82% – I don’t plan to hire a freelancer either
• 4% – Accounting
• 4% – IT Services
• 3% – Customer Service
• 3% – Recruitment/Human Resources
• 2% – Digital Marketing
• 2% – Virtual Assistant
• 2% – Other
• 0% – Development
40% of Small Businesses That Work With Freelancers Instead Used LinkedIn to Find Freelance Talent
Sourcing freelance talent can be a tricky business, given how many platforms professional service providers use to advertise and showcase their talents. LinkedIn has of late become a primary channel for identifying and negotiating with freelancers, given the potential for business networking that the platform makes possible. Other channels are less utilized, such as Freelance.com and Upwork.com, primarily because the costs of using these platforms can be prohibitive for both the service provider and the client.
• 40% – LinkedIn
• 13% – Freelancer.com
• 13% – Self-sourced freelancer
• 7% – Upwork
• 7% – Thumbtack
• 7% – Other
Regardless of the channels used for sourcing and securing outsourced talent, freelancers and outsourced business process service providers are gradually becoming an increasingly important resource. Organizations increasingly need access to more efficient ways of operating and the ability to add services for clients that might be beyond their current capabilities. The benefits of increased efficiency and expanded workload capacity far outweigh some of the challenges faced in the process. This will become especially true as accounting processes become more complex and IT services and Marketing become increasingly reliant upon artificial intelligence and other complex automation technologies.
U.S. Regions
The trends around business process outsourcing at a regional level show IT services tend to dominate outsourced tasks, with marketing and accounting and financial services leading in several regions. This is in line with the growing need to secure automation solutions and to shift onsite IT to cloud services. Perhaps the most interesting trend revealed by our respondents is that in most regions, a majority of business-to-customer companies don’t currently outsource any business processes, meaning that a slim majority of our respondents don’t outsource.
16% of U.S. Small Businesses Don’t Outsource Any Business Process
• NORTHEAST
(B2B) 16% – IT Services
(B2C) 18% – IT Services
• MIDWEST
(B2B) 18% – IT Services
(B2C) 30% – Don’t currently outsource any business processes
• SOUTH
(B2B) 16% – Accounting
(B2C) 26% – Don’t currently outsource any business processes
• WEST
(B2B) 20% – Digital Marketing
(B2C) 22% – Don’t currently outsource any business processes
Accounting, IT services, and Digital Marketing comprise the top three business processes outsourced by our respondents, which makes a certain amount of sense when considering that we engaged small businesses in our survey. It makes sense that small operations would want to focus internal staffing and culture around client management and sales. While a decent amount of respondents also outsourced customer service and HR processes, it makes sense that more organizations would retain these as in-house tasks. Keeping both client engagement and the hiring and ongoing development to your existing staff ensures customers are receiving the best quality branded experience possible from well-trained individuals who are being taught the culture and performance expectations in-house rather than by individuals with no ties to the operation beyond a contractual agreement.
Full U.S. BPO Breakdown:
• 16% – I don’t currently outsource any processes
• 15% – Accounting
• 15% – IT Services
• 15% – Digital Marketing
• 11% – Customer Service
• 9% – Recruitment/Human Resources
• 9% – Development
• 9% – Virtual Assistant
• 0% – Other
Canadian Regions
Our Canadian business counterparts are significantly more willing to outsource business processes in all categories, with every region prioritizing the outsourcing of one business process or another. Accounting services seem to dominate the field, followed by IT services further into the Western and Northern territories.
19% of Canadian Small Businesses Outsource Accounting Services
• NORTHERN TERRITORIES
(B2B) 21% – Development
(B2C) 20% – IT Services
• CENTRAL CANADA
(B2B) 19% – Accounting
(B2C) 21% – Digital Marketing
• ATLANTIC PROVINCES
(B2B) 29% – Accounting
(B2C) 28% – Accounting
• PRAIRIE PROVINCES
(B2B) 15% – IT services
(B2C) 14% – Accounting
• WEST COAST
(B2B) 23% – Accounting
(B2C) 14% – IT Services
Like the American respondents, a clear majority of businesses showed in this survey a preference for outsourcing Accounting, IT Services, and Digital Marketing services. However, a proportionately lower percentage of Canadian companies claimed that they weren’t outsourcing at all.
Full Canadian BPO Breakdown:
• 19% – Accounting
• 17% – IT Services
• 15% – Digital Marketing
• 12% – Virtual Assistant
• 11% – Customer Service
• 11% – Development
• 10% – Recruitment/Human Resources
• 3% – I don’t currently outsource any processes
• 2% – Other
60% of Small Businesses Work With a U.S. Based Outsourced Team
Of our respondents who state that they outsource a business process of some type, a majority seek out United States-based teams to handle their accounts. The closest competitive market for finding outsourced services is Canada, with India coming in third in our survey.
Locations of the outsourcing teams that small businesses work with:
• 60% – United States
• 20% – Canada
• 4% – India
• 3% – China
• 3% – Mexico
• 2% – Philippines
• 2% – Ukraine
• 2% -Vietnam
• 1% – Taiwan
• 1% – Argentina
• 1% – Poland
• 1% – Other
Working with outsourced teams can present a number of challenges for both the client and the service provider, especially if the client and provider operate in different time zones or in different countries. In order to maximize productivity resulting from the working relationship from the outset, it becomes important to:
- Establish contractually predetermined hours of service when the client can be assured they will be able to reach a service representative.
- Leverage communications tools that allow for both real-time engagement and asynchronous collaboration to keep the work flowing forward if something needs to be addressed outside of the agreed-upon service hours.
- Include emergency contact protocols in the agreement.
- Find a provider who offers around-the-clock services, which can often be a standard service model depending on the service being outsourced.
- Depending on how much client engagement your outsourced partner will handle, it might make sense to outsource to a service provider local to your customer base.
30% of U.S. Outsourced Teams Are Based in the Midwest
As the workforce becomes more distributed and less tied to office spaces and urban centers, the remote work movement has opened up new areas of the United States workforce to alternative working arrangements. Outsourced teams are starting to gain footholds in areas like the midwest, allowing skilled workers to find meaningful and more complex work in the midwest and beyond. This allows midwest-based businesses to attract high-quality employees at higher rates than a company servicing local clients only, all while the business overhead costs are kept low through lower rent, taxes, and other operating costs.
63% of Canadian Outsourced Teams Are Based in Central Canada
The remote worker spread in Canada is less spread out and most concentrated in Central Canada. This makes sense given both the country’s propensity for outsourcing and that Canada is the second on the list of countries outsourced to the most. Central Canada provides a centralized hub for remote work teams relative to the rest of Canada and places them close to the United States border in order to facilitate working relationships across country lines.
The results of our survey give a very different view of the outsourced business processes practices for the United States and Canada. While the United States hasn’t overwhelmingly embraced the model, businesses that have done so follow a fairly similar strategy of outsourcing to their Canadian neighbors, prioritizing accounting, IT services, and digital marketing departments.
Industry Breakdown of Respondents
Using data gathered during the survey, we were able to categorize our respondents according to specific metrics, in order to better understand the types of businesses more apt to outsource. The identifiers we focused on in our analysis include:
- Respondent Role or Title
- Type of Industry
- Business Profile – Number of Employees, Years in Business, Total Annual Revenue
- Monthly Average Budget dedicated to Business Process Outsourcing
- Small Business Outsourcing Statistics: Factors, Traits, Benefits
Our respondent mix in this survey was divided between the ownership and managers and non-management staff. Just over a quarter of respondents came from management at one level or another, while just under an eighth of the responding community came from the non-management side of their operation. Overall, the majority of responses came from B2B service providers, with only about a third of the responses sourced from B2C providers.
• 18% – Business owners
• 12% – Non-management staff
• 9% – Middle management
• 67% – B2B
• 33% – B2C
• 32% – have been in business for 3-5 years
• 31% – 51-100 employees
• 33% – $500,000-$2M annual revenue
• 27% – $1,500-$1,999 monthly budget pre-COVID
• 28% – $1,500-$1,999 monthly budget post-COVID
Industry Type
Respondents to our inquiry come from a fairly standard mix of industries, but it’s interesting to note that the top four responding industries operate outside of the purview of the most often outsourced tasks. Other companies with representatives who responded that show up further down the list offer the types of services traditionally outsourced, and are likely to fill in gaps outside of their specialization. For example, an Information Services provider might handle their own information technology needs in-house because they have the expertise and resources to do so, but still might outsource their accounting or marketing departments.
• 11% – Education
• 11% – Other
• 9% – Healthcare
• 8% – Construction
• 5% – Information Services
• 5% – Finance & Insurance
• 4% – Agriculture
• 4% – Software
• 4% – Retail
• 4% – Hospitality
• 4% – Arts & Entertainment
• 4% – Marketing & Sales
• 3% – Telecommunications
• 2% – Scientific or Technical Services
Business Profile
27%-28% of Businesses Had a Monthly Business Processing Outsourcing Budget of $1,500-$1,999 Both Pre-COVID and Post-COVID
While COVID-19 had a significant impact on business practices, remote work, policy, and other operational components, it didn’t seem to impact outsourcing practices either negatively or positively. Interestingly, the outsourcing budgets of our respondents remained in the $1,500-$1,999 range on a wide range of annual revenues, showing that companies who prioritize strong operations are willing to dedicate the funding necessary to back up those operations with skilled service providers.
| Business size | Years in Business | Annual Revenue | Monthly BPO Budget Pre-COVID | Monthly BPO Budget Post-COVID |
|---|---|---|---|---|
| 2-100 employees | 33% 3-5 years in business | 34% $500,000-$2M revenue | 33% $500-$1,499 monthly budget pre-COVID | 26% $1,500-$1,999 monthly budget post-COVID |
| 101-250 employees | 41% 10+ years in business | 27%$3M-$5M revenue | 32% $1,500-$1,999 monthly budget pre-COVID | 29% $1,500-$1,999 monthly budget post-COVID |
The breakdown in respondents is spread across small businesses with varying staff sizes, but the majority of the study’s responses come from businesses with between 1,000 and 5,000 employees with annual revenues of more than $10 million. Additional information came from a fairly even spread of smaller organizations with a range of annual revenues from as little as $500,000 to $9 million.
Changes in the Workplace and Improvements to the Employee Experience
47% of Business Owners and Employees Have Been Working Remotely for 1-5 years
There was a growing dialogue pre-COVID across industries about how the future of work and how technology solutions and growing workloads made a strong argument for remote working arrangements. THis dialogue evolved into a growing demand by employees for the ability to work from home or more flexible work arrangements. Despite the increasingly vocal demands, many organizations refused to implement remote work, claiming concerns about reduced productivity and difficulty in maintaining the corporate culture. This is reflected in the fairly low percentages of respondents who have been working remotely for longer than 6-9 years.
However, in the wake of the pandemic, owners realized there was a need to maintain business continuity and remain productive despite lockdowns and quarantines. There was also an increasing need to support massive business model pivots as organizations sought to embrace eCommerce models and other methods of responding to changes in consumer behaviors. With employees either forced to remain home or choosing to work outside of the office due to safety concerns where quarantines hadn’t been fully imposed, the spike in remote work arrangements in the last 1-5 years according to our respondents makes sense. Employers have been forced to allow for work-from-home, remote arrangements, or hybrid work models in order to keep the doors open and meet the needs of their clients.
In this survey, our respondents who claim to dedicate resources to outsourcing came largely from small businesses with low to mid-range annual revenues. Despite the small size of their operations, they support their success and operational stability by dedicating a significant portion of their revenue streams to their outsourcing budget to fill in for skill gaps and business process gaps.
Outsourcing Communication Methods
53% of Small Businesses Communicate With Their Outsourced Teams Daily
With communication cited by many respondents as one of the primary challenges faced in outsourcing and working with freelancers, we wanted to gain some insight into how often clients communicate with outsourced teams. With the number of processes being outsourced and their impact on day-to-day operations, it makes sense that more than half of respondents communicate at least daily with their support teams. Just over a third communicate at least weekly with their contracted service providers. In the rare case of long-term, ongoing projects that require little input throughout the workflow, only 8% of respondents state they are communicating with the service providers on a monthly basis only.
Frequency of communication:
• 53% – Daily
• 38% – Weekly
• 8% – Monthly
25% of Small Businesses Primarily Communicate With Their Outsourced Teams Through Email
In their daily or weekly communications, half of the respondents are leveraging either email or video conferencing tools to keep in touch with their outsourced teams, with another 20% relying on phone communications. Just under a third are relying on software solutions that allow for messaging and task management as well.
• 25% – Email
• 25% – Video Conferencing
• 20% – Telephone
• 17% – Instant Messaging
• 12% – Project Management Board
With so many channels to communicate and coordinate with an outsourced team, we reached out to the business community to find out what methods were being used across industries.
“It is critical to analyze all areas of work when deciding to engage with an outsourced team to develop software. Communication is particularly important in this case because it aids in streamlining the development process and resolving any concerns fast. If you start communicating with an outsourcing company straight away, you may prevent and overcome all of these obstacles while still getting high-quality output. So I try to contact my staff as much as possible via email and, sometimes, Zoom.”
—Benjamin Knowles, Marketing Manager, E-Scooters Central
“We have a weekly virtual meeting to share work progress. But if any emergency arises, we can communicate daily. We usually use Zoom, Skype, and Trello for our daily communication.”
—Caio Bersot, Head of HR, Rank-It
“How often we communicate really depends on the type of task. There are freelancers and teams we speak to daily, but others where we’ve arranged to just set a task to and communicate feedback once they are finished. We use Zoom and Skype, Trello for task management, email and some internal tools we have built ourselves.”
—Matt Benn, Founder, Soundplate
Communication is crucial for offsetting any of the drawbacks found to be of concern in outsourced business processes or freelance working relationships. With clear and effective communications channels in place and a strategy built around managing expectations and setting clear instructions for all deliverables, clients can mitigate many of the challenges that arise from poor communication practices.
Are You Planning to Outsource Business Processes or Hire Freelancers?
Much has changed over the last two years in regards to client expectations and behaviors, and many businesses, new and established, are finding that in order to truly meet business demands, additional resources are necessary.
This can come in the form of establishing a relationship with freelancers on single projects or with a business that specializes in outsourced business processes to support your accounting, HR, IT services, marketing, or any other internal process where you might be lacking the personnel, resources, or expertise.
Whatever the challenges you might face building out your business strategy for next year, the UpCity marketplace of B2B service providers is a great resource to explore service providers, learn more about how to grow your business without significant cost to your bottom line, and overall increase your efficiencies.
UpCity’s Survey Method
UpCity used Pollfish to survey 600 small business owners and employees across the United States and Canada. The small businesses we corresponded with have a business size of 2-250 employees.
Twelve percent of small businesses have 2-5 employees, twelve percent have 6-10 employees, thirteen percent have 11-25 employees, sixteen percent have 26-50 employees, thirty-one percent have 51-100 employees, and seventeen percent have 101-250 employees.
U.S. respondents are based in the Northeast (18%), the South (39%), the Midwest (16%), and the West (27%). Canadian respondents reside in the Atlantic Provinces (12%), Central Canada (16%), Prairie Provinces (2%), Northern Territories (3%), and the West Coast (7%).
Fifty-nine percent of respondents are male and fourty-one percent of respondents are female. Respondents’ ages range from 18-24 (16%), 25-34 (36%), 35-44 (32%), 45-54 (8%), and 54+ (8%).