Recession imminent? Outsourcing to the rescue!

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Recession imminent? Outsourcing to the rescue!

The imminence of a global recession has been rapidly gathering unusual momentum in corporate circles and the public discourse within the past 12 months. Ipso facto, you could well say that the writing is already on the wall: Inflation in the US is currently at a giddy 40-year high, fiscal policy pertaining to quantitative easing is unequivocally unsustainable and the five major stock indices in the US are on a downward trend. The economic losses incurred due to COVID-19 and the Russian-Ukraine war are also considered to be contributing factors though it remains to be underscored whether they are the primary/underlying causes of this imminent recession or merely immediate cause accelerating factors or merely chance occurences with marginal effects.

The US economy is categorically the bellwether paradigm for the global outsourcing industry. A 2017 KPMG study found that the US accounts for approximately 85% of global business process outsourcing deals. It is therefore expected that the ambient economic environment coupled with current White House fiscal and regulatory policy will largely define the short and long term deal making strategy of global outsourcing. It is unequivocally the case that stringent/poor fiscal & regulatory policy, high cost of operations and economic contractions (recessions) are positively correlated with an uptick in global outsourcing. The 2008 Global Financial Crisis is the quintessential example. Global outsourcing activity increased by at least 57% since the 2008 crisis (fig 1.). Corporations such as IBM, Google, Apple, Cisco, Microsoft and Netflix survived in small or large measure due to their business pivot towards outsourcing during the crisis.

Fig 1. The popularity of outsourcing since the recession of 2008-2009

The lockdown restrictions conferred by the COVID-19 pandemic has also facilitated higher digital transformation adoption levels leading to likely higher levels of growth of the digital contact center outsourcing industry (by end of year, 2022). (fig.2).

Fig 2. COVID-19 inmpact on the contact center outsourcing market

In brief summation, two points are clear:

  1. A global recession is very imminent and contingency planning and strategy is very expedient to mitigate the effects of the inevitable recession (123)


2. Outsourcing is a/the panacea to averting the devastating effects of such a recession (4) and it behoves all corporations and stakeholders alike to quickly consider and implement strategies aimed at optimizing costs whilst maintaining productivity levels courtesy of outsourcing. Regulatory bodies and governments also ought to relax laws, regulations, policy frameworks and directives to ensure that corporations are kept afloat during the recession.

The economy can essentially expect the following benefits due to outsourcing;

  • Sustained levels of corporate profitability due to the reduced operating costs conferred by outsourcing leading to high cash flows and relatively higher tax revenues
  • Streamlining of business processes so companies focus exclusively on their core product/service portfolio and competencies. Companies essentially become more efficient and productive due to outsourcing and this helps sustains the provision of pertinent services such as customer service, payroll, technical support, reservations, claims etc to the local citizenry
  • New and better quality job niches for retained staff. Entry level positions are typically at the highest risk of being outsourced during a recession. Onshore jobs that are typically kept are higher paying jobs and retained staff can typically expect to fill in or expand into these roles. New job niches and opportunities can also be created for existing staff.
  • Prevention of temporary or permanent shutdown of operations. In every recession cycle, several companies either undergo temporary or permanent shutdown of operations. Outsourcing can help forestall such shutdowns so companies have a lifeline of support to continue producing their products and services and serving their communities.

A recession is imminent and outsourcing can help you partially or completely forestall the otherwise negative accompanying effects. Partnering with a seasoned BPO & ITO firm such as Corpshore Solutions is one instrumental step you can take today to safeguard the future of your company. Get in touch now and request a free proposal on how we can help optimize your costs and boost your operations courtesy of our cutting-edge outsourcing methodologies and technologies.

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