Companies Increase Outsourcing during Recession
“The business of America,” famously observed U.S. President Calvin Coolidge, “is business.” Economic recession or not, work must continue to get done. Last month, we reported on the acceleration of homeshoring (US-based companies turning to U.S.-based freelancers to get work done) and the growing freelance economy. Today, we’re releasing some new survey results that fall right in line with the previous data.
We surveyed 600 small businesses to determine how the recession is affecting their outsourcing plans. Our survey results showed that 41.9% said they planned to outsource more in the near future, either because they’ve cut full-time staff (7.0%) or because they’re simply unable to hire full-time staff (34.9%). They are also outsourcing more functions than ever before – 28.5% said they are now outsourcing something that they previously thought they couldn’t. In light of such numbers, it’s hardly any surprise that 14.6% of them report that they have replaced employees with contractors in the last year, and 14.5% have hired a contractor who would have been otherwise unemployed or a victim of the economic downturn.
| Outsource more in current recession | 41.9% |
| Because you have cut full-time staff | 7.0% |
| Because you are unable to hire full-time staff | 34.9% |
| Outsourcing something you previously thought you couldn’t | 28.5% |
| Replaced employees with oDesk providers | 14.6% |
| Hired an oDesk provider who would have otherwise been unemployed or a victim of the economic downturn | 14.5% |
It should come as no shock, then, that many who have lost work recently are turning to freelancing. 32.1% of the 350 freelancers we surveyed reported that they’d lost their job within the last year. A majority (59.0%) said that if they weren’t providing freelance services, they wouldn’t be able to meet their financial obligations and nearly a third (32.4%) said freelance earnings are their primary source of income. A vast majority said that there are enough jobs on oDesk to meet their needs (73.9%) and feel they are earning fair rates (77.9%). They cited “flexibility to live and work anywhere” as the number one reason for using our platform, followed by guaranteed payment for hourly work and the ability to set their own hourly rate.
| Lost their job in last year | 32.1% |
| oDesk is my primary source of income | 32.4% |
| Wouldn’t be able to meet my financial obligations without oDesk | 59.0% |
| There are enough jobs on oDesk to meet my needs | 73.9% |
| I earn fair rates on oDesk | 77.9% |
American workers seem to be doing well in the global marketplace. 53.9% of the surveyed small businesses reported employing at least some U.S.-based contractors, while 84.3% of U.S. contractors are working for a U.S.-based buyer.
Outsourcing on oDesk nearly tripled during 2008, and the trend looks likely to continue.
It may be too early to describe what’s happening as a seismic shift in how Americans find and relate to work. However, the numbers do clearly show a greater acceptance of contract work in the general culture. Clearly, U.S. businesses are taking full advantage of the pool of freelance talent that’s out there, at the same time that more and more people are discovering the possibilities that contract work provides.
nice article.
cool one
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Amjith PS
Senior Developer[PHP/Ruby on Rails/Javascript]
Skype : amjithps
Yahoo : amjith56_ps
Prominentlabs technology solutions and Services
Very informative survey, worth reading!!!!
Thanks for the info. Yeah it is true. I agree!!!
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Good and Bad..Good for Virtual assistants, Bad for the full-time employee getting laid off. I was laid off in November 2008..I have 5 children all under 16 and I started my own VA Biz…Virtual Assist Me..Supporting Small Businesses..It’s a process but I don’t miss the crazy mornings rushing around.
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very informative. thanks
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It totally makes sense for companies to outsource work ; be it during recession or not. With the exception of core functions; an company should outsource all non core functions. This way, an organisation can be lean & mean; thus braving tough times much better..
suhas katti.
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suhaskatti
April 15th, 2009 at 1:42 am
It totally makes sense for companies to outsource work ; be it during recession or not. With the exception of core functions; an company should outsource all non core functions. This way, an organisation can be lean & mean; thus braving tough times much better..
suhas katti.
I would have to agree with Suhas, out sourcing isn’t always the best solution as this can actually cost the company more in the long run making it worse financially.
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I think outsourcing became bigger during the recession because businesses have cut their workforce and in turn have to rely on outsourcing as a means to cut costs. Hopefully though when the economies have recovered, they will be able to hire or re-hire people who are out of job and hit hard by the recession.
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