The US market has been facing critical labor shortages for the past few years. According to Forbes, around 4 million Americans quit their jobs between April and November of 2021.
In this article, we will explore the key factors behind the global labor shortage and how outsourcing can help businesses overcome this shortage.
In this blog, we will discuss:
- The Reasons Behind Global Talent Shortage
- Gap in Key Skills
- Drastic Economic Shifts
- Demographic Changes
- How Outsourcing Can Help Overcome Global Talent Shortage
- Breaking Geographical Barriers
- Cutting Recruitment Costs
- Fill Skill Gaps on Demand Fast
- Scalability to Help Your Growing Business
- Availability of Specialized Knowledge
- Advantage of Working in Different Time Zones
- Final Thoughts
Key Takeaways
- Globalization and automation, for instance, have completely transformed the job market.
- One of the main causes of this demographic shift is the retirement of baby boomers which has left a massive gap in the market.
- For small and medium-sized enterprises (SMEs), outsourcing removes geographical barriers unlocking skilled professionals from all over the world.
- Reducing Hiring Expenses and onboarding full-time employees are incredibly long and costly processes, but outsourcing saves SME companies from this hustle.
- By outsourcing work to teams in different time zones, businesses can continue their operations even after typical business hours, significantly boosting productivity and shortening project schedules.
The lack of qualified personnel is a challenge faced globally, regardless of the business or its size. With a growing need for a skilled workforce, organizations are unable to deploy existing workers as afforded.
These organizations struggle with recruitment and end up having long hiring cycles. The impact of having a low-skilled workforce is serious. Talent shortage nurtures a decline in productivity and poor service delivery, which in turn will increase labor attrition.
As for the current state of the job market, it’s overly saturated, meaning there are way too many employers competing for the same set of candidates. According to one research study, there are 77% of companies who are facing difficulty hiring suitable candidates across the globe owing to a shortage of qualified personnel.
Also read: Outsourcing in 2024: A Solution to the Labor Shortage
But What are the Reasons Behind Global Talent Shortage?
Recently, the job market has been in a bind. Many jobless individuals with little training and experience have begun to hunt for work, which has caused some problems.
Even though more individuals are available to work, several industries are having difficulty maintaining equilibrium.
Let’s examine the causes of this:
Skill Gap
Currently, managers are looking for willing learners and people who are already conversant with the most recent technologies and trends, especially in marketing and technology.
However, the problem is that many job seekers in new or experienced industries do not have those speed skills and are being ignored by potential employers. It is challenging to keep up, resulting in a huge gap between what employers need and what candidates can provide.
Also read: How Data Entry Outsourcing Can Cut Costs and Boost Efficiency in 2024
Economic Shifts
However, it’s not only about skills. Globalization and automation, for instance, have completely transformed the job market. That is why companies have to spend a lot of money on the training and development of their employees.
This is because businesses need specialized expertise from their workers, and it is not easy to come by.
Demographic Changes
This is also a factor, as the workforce is becoming more diverse, causing problems. One of the main causes of this demographic shift is the retirement of baby boomers which has left a massive gap in the market.
On the other hand, the younger generation (millennial and Gen Z) are tech-savvy but they lack the experience required to run businesses.
Also read: Why Outsourcing Customer Service is the Smartest Move for Growing Your Business
How Outsourcing Can Help?
Breaking Geographical Barriers
For small and medium-sized enterprises (SMEs), outsourcing removes geographical barriers unlocking skilled professionals from all over the world. The US companies that lack local software developers need only look to geographical regions where the skill is rich and cheap to access.
The global outsourcing market was worth $92.5 billion in 2019, and with increasing momentum for remote and flexible working models, the trend is only set to grow in the future.
Cutting Recruitment Costs
Reducing Hiring Expenses and onboarding full-time employees are incredibly long and costly processes, but outsourcing saves SME companies from this hustle.
Instead, you pay for the services you specifically need — no onboarding, no benefits, no overhead. Would you rather spend—on average—$4,700 to bring someone on board who might be a misfit?
Average cost of hiring a full-time employee in the US is almost $4,700. In contrast, certain functions can be outsourced at a fraction of the cost — for example, administrative roles can be outsourced to save as much as 78% over the operational cost with in-house employees
Also read: Why OWL TPS is the Best Choice for Hiring Virtual Assistants
Fill Skill Gaps on Demand Fast
Outsourcing is the best tool for closing skills gaps and bridging the skills gap with the pace of the fast-moving market. Instead of hiring a full-time marketer for a short-term campaign, a retail SME can outsource a project to a social media specialist and get things moving quicker.
In Numbers: As per Clutch, 8 in 10 small businesses intend to outsource at least one business function in 2024, with IT services and digital marketing considered top priorities.
Scalability to Help Your Growing Business
By hiring more if there are contracts or downsizing you can save a lot of money, especially in fluctuating demand industries. Rather than dealing with other problems of hiring employees at peak time, SMEs can hire outsourced partners who will provide them with human resources as per their needs.
The ability scale up or down reduces the anxiety of long-term investments and allows businesses to adapt quickly to market shifts.
Availability of Specialized Knowledge
Many SMEs find it challenging to hire highly skilled individuals as full-time employees. Outsourcing can help you access professionals with specialized knowledge in areas like artificial intelligence (AI), blockchain, cybersecurity, or advanced marketing analytics that might not be easily accessible in your area.
Without having to make a significant investment in hiring or training, these specialist talents can provide SMEs with a competitive edge.
Also read: 5 Key Benefits of Outsourced Administrative Support to Boost Your Bottom Line
Advantage of Working in Different Time Zones
By outsourcing work to teams in different time zones, businesses can continue their operations even after typical business hours, significantly boosting productivity and shortening project schedules.
Consider a US-based SME that, at the end of the workday, gives its Indian outsourcing partner a web development task. The Indian crew may start working right away and make great progress over night because of the time difference. The outsourced team might have finished a project phase or submitted a draft by the time the SME’s own team begins work the following morning. This continuous process keeps projects moving forward without needless delays and speeds up turnaround times.
This model is especially useful for sectors like tech development, customer service, and content production, where speed is essential. To guarantee that consumers receive round-the-clock assistance, even on weekends and holidays, an e-commerce SME can, for example, contract out customer service to teams located in different time zones.
Final Thoughts
Outsourcing in 2025 is a perfect way to handle the labor shortage in the US across a number of industrial sectors, and it goes well beyond simply reducing overhead expenses.
Working with a seasoned outsourcing company allows companies to reach and collaborate with leading international marketplaces and concentrate on expanding their business.
Also read: Here’s How You Can Save Up to 70% in Labor Costs by Outsourcing
In 2025, outsourcing is a strategic need for companies trying to negotiate the complexity of the labor market, not just a cost-cutting tactic. Businesses can access a worldwide talent pool, save costs, concentrate on their core competencies, get operational flexibility, and reduce risks by adopting outsourcing. Outsourcing is a convincing solution to the problems at hand, and the changing nature of the labor market demands creative answers.
At OWL TPS, we’re here to break through the walls of talent scarcity in every department by providing the skills and expertise you require and acting as an extension of your executive team.
Contact us now and find new outsourced resources who care for your customers and your business!
