Why US Companies Are Increasingly Outsourcing in 2025

Outsourcing labor is more popular than ever. As of 2024, approximately 300,000 jobs in the US were outsourced, and the entire industry was worth an estimated $300 billion. These numbers are only expected to increase (3,2). By 2030, the outsourcing industry in the US is predicted to be worth over $500 billion (2). This significant growth reflects a clear trend among American companies outsourcing their operations.

Outsourcing labor is a complicated topic. Businesses naturally have many questions, and they are all worth asking. So, what exactly is outsourcing, and why do companies outsource? We’ll explore the reasons why companies that outsource are seeing success, what roles they should consider, where to find global talent, and how to get started.

What Is Outsourcing?

Outsourcing, in terms of labor, is the practice by which a company contracts with an external, third-party provider to perform specific tasks, functions, or services that would otherwise be carried out by its own internal employees. Roughly 66% of American businesses reported outsourcing at least one department by 2024, and the practice is only going to get more common in the coming years, with 80% of executives planning to maintain or increase their use of third-party outsourcing (1).

When this outsourced labor is performed by individuals or teams located in a country other than the contracting company’s primary operations, the practice is known as offshoring. This strategic model involves leveraging global talent pools and differences in wages and cost of living to get any business the best workforce for less.

The rise in popularity of specialized offshoring agencies, alongside the explosive advancement and widespread growth of remote work technologies, has together made offshoring a more accessible and common practice than ever before for American companies outsourcing.

Offshoring itself has a long history in the US. Multinational conglomerates that emerged early in the nation’s history leveraged their international presence to build up a customer and manufacturing base that spanned the globe. The practice of offshoring as we know it today mostly started in the 1960s and ‘70s as a means for American companies outsourcing manufacturing at a lower cost. Among the early innovators in the field was International Business Machines (IBM).

The practice took off since its origins, and countless businesses now use offshoring not just for manufacturing, but for everything from customer service and tech support, to product design and development—showcasing the evolving reasons why companies outsource.

Why Are American Companies Outsourcing?

The answers are endless. Reducing labor expenses, finding talent, and managing hardships are all common reasons, and there are countless others, but they’re reasons that most any business has, and they should absolutely inform your business’s decision to outsource.

Reducing labor expenses is one of the primary reasons why companies outsource. Outsourcing has the potential to significantly reduce a business’s expenses. Labor alone can make up over 70% of a business’s expenses, and any reduction could make a massive difference in its ability to function. By switching to an offshore labor force, businesses have the ability to potentially reduce their labor expenses by upwards of 70%, and the ability to save doesn’t seem to be slowing down anytime soon.

A lack of talent is also one of the most significant drivers of why companies outsource and offshore today. Specialized and experienced employees can be hard to find in the US, and if they can be found, they often command a premium. By outsourcing, businesses can easily bring in talent from anywhere in the world, accessing specialized and experienced workers no matter where they are, and more affordably than their domestic counterparts.

The current economic and political scene is also a major driving factor. Trump’s tariffs have created – and continue to create – a significant amount of economic uncertainty. Businesses are naturally looking to hedge their bets against a murky future, and many companies that outsource workers see the practice as an effective means to reduce expenses and risk. 

Businesses today see all of these reasons and more as justifications for outsourcing. Even if your business doesn’t face these specific challenges, all businesses face challenges, and outsourcing can provide the solutions you may need.

What Roles Should Be Outsourced?

Outsourcing today isn’t fixed to any specific role, but the times have changed, and American companies outsourcing today have more options than ever. Historically, the outsourcing and offshoring of labor were limited to low-skilled labor: cheap manufacturing jobs, basic customer support, and sales, but outsourcing can now be used to fill countless roles that were once reserved exclusively for highly educated in-office workers.

Virtual assistants are an incredibly common position to be filled by companies that outsource. They can work from anywhere in the world, and still help manage a business’s operations, provide support, manage schedules, and help with day-to-day tasks. They can drastically increase any business’s productivity and are quickly growing to become an indispensable resource. By using an offshore virtual assistant, a business can drastically reduce the expenses associated with hiring a domestic one, and they should be the go-to option for any business looking to hire one.

Accounting and finance operations can be easily outsourced anywhere in the world. Almost every qualified accountant or financial professional today has literacy in the international aspects of the trade and can be useful to any business anywhere in the world. To work effectively in today’s business environment, knowing the rules and regulations across borders is a virtual necessity, and any business can find a skilled accountant who can work within their local tax code anywhere in the world.

Marketing and graphic design are also perfect positions to be filled by offshore workers and teams. A skilled artist is a skilled artist no matter where they are in the world, and they can easily create something that meets a business’s desired specifications. But marketing is no longer just about simple graphics. Skilled employees who can manage your online presence might make all the difference. Employees who specialize in optimizing your business for search engine compatibility and always keep you at the top are a vital resource in today’s market. Both can be readily managed by an employee anywhere on the planet.

Tech support can also be easily managed offshore. An employee from anywhere in the world can give you or anyone in your business a hand with whatever computer issues pop up. The fundamentals of computers are virtually universal, no matter where you are in the world. Operating systems are standardized across the board, and applications right alongside them. For American companies outsourcing, IT is a prime target. 

Companies that outsource have an advantage in both their ability to find talent and fill roles without the premium price tag. Any business should seek to take the same advantage.

Where Should You Outsource?

Where can companies that outsource find talent today (unsure of an article to integrate)? The sky’s the limit. Skilled individuals can be found anywhere in the world, but there are a handful of popular destinations often preferred by American companies outsourcing.

India has long been a tech hub of the world. The nation has some of the best engineering and IT universities on the planet. English is also one of the most popular languages in the country, with over 100 million speakers. The country’s low cost of living, coupled with its low wages and favorable exchange rates, contributes to its attractiveness, making it a top choice for companies that outsource.

The Philippines is another popular destination for American companies outsourcing. It is the fifth-largest English-speaking country on the planet, with English being one of the nation’s two official languages. The country also boasts a high-quality education system, producing top-notch graduates with degrees in computer science, finance, accounting, and marketing. Like India, the Philippines also benefits from low wages and a low cost of living.

South Africa is also growing in popularity as a destination for the outsourcing and offshoring of labor. South Africa is considered part of the Anglosphere, and English is one of the most common languages spoken in the nation. South Africa is well known for having some of the best universities on the planet and has become a technological and economic hub of the African continent. Like many other popular destinations for American companies outsourcing, South Africa also has low wages and a low cost of living.

For businesses that outsource or are looking to outsource, there is nowhere in the world they cannot go to find the right employees for the job.

How Do You Outsource?

Outsourcing was once restricted to only the largest of businesses. In years prior, American companies had to hire employees and build up an infrastructure all on their own dime, making it cost-prohibitive for smaller businesses. But that’s changed (integrate link to one of our handbooks?), and outsourcing today has never been easier.

A multitude of businesses dominate the offshoring and outsourcing industries today, and stand ready to provide support and help your company hire any employees it might need in any offshore destination. Offshoring and outsourcing firms can help your business determine just what employees it needs, find the right candidates, go through the interview process, and even provide you with specialized technology to optimize the work experience. For companies that outsource, staffing agencies are a near necessity.

New kinds of offshore staffing agencies are even rising up today, changing the nature of outsourcing and offshoring. These include Employer of Record (EOR) companies, which are legally registered businesses in offshore countries that officially hire employees as part of their business. This takes the liability off of the hiring business and means that companies that outsource no longer have to worry about local labor laws, payment methods, or legal wrangling.

Creating an offshore labor force, finding the right talent, and saving money can all begin with just contacting the right staffing agencies, and that’s something that any business can do.