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.
This mass resignation during the pandemic, known as the Great Resignation or the Big Quit, has greatly burdened companies that are now finding it difficult to hire skilled talent for an affordable salary.
In addition, this shortage is further fueled by high retirement rates, increasing skills gaps due to technological advancements, and newer generations entering the workforce.
Why is the US Currently Facing Labor Shortages?
The Big Quit
During the Covid-19 pandemic, many workers were either laid off or asked to work remotely. This time period gave them ample time to evaluate their careers, and due to this, many didn’t return to their jobs, creating a gap in the market.
Here are some of the factors that led to the Big Quit:
- Employees were interested in jobs that offer more flexibility and work-life balance.
- Pandemic relief packages enabled people to start their own businesses, get new certifications, or explore something new.
- Stagnant wages and rising living costs forced people to pursue new careers, offering more financial stability and growth options.
- Other reasons included job dissatisfaction and safety concerns as employees were forced to return to offices in the middle of the pandemic.
Geographic Migration
Interestingly, not only are people leaving jobs, but they are also shifting to more affordable localities.
As per LinkedIn data, a geographic migration trend shows that a lot of workers are leaving big cities like San Francisco and Chicago, and many are moving to places like Austin, Miami, and Greenville, mainly because of affordable housing and living costs.
Baby Boomers Retiring and Gen Z Quitting
After studying LinkedIn’s extensive data, Karin Janel Kimbrough, an American economist and Chief Economist at LinkedIn, has revealed the biggest factor behind the labor shortage in the market.
In her interview with 60 Minutes, she disclosed that millions of baby boomers are retiring early, and millions more young individuals are simply quitting. The number of women quitting is more than that of men.
Impact of Labor Shortage on Industries
Undoubtedly, the Great Resignation has shifted the power from employers to employees. This has created the following challenges for companies to retain their current employees:
- Provide better salary packages and employee benefits
- Increase the minimum wage to attract skilled prospects
- Offer extended paid leaves, flexible work arrangements, and other perks
How Can Outsourcing Help?
By partnering with a professional outsourcing firm, companies get access to skilled talent from different parts of the globe at a fraction of the cost compared to hiring an in-house team. This allows businesses to bridge the gaps and run their operations smoothly without going through the hassle of hiring, training, and managing an extensive in-house workforce.
But How Does This Work?
The trend of demanding high salaries is one of the main reasons why companies are having a difficult time finding the ideal candidate in their budget.
This is where outsourcing provides a breath of fresh air to all businesses by providing an alternate and affordable hiring solution. You can save up to 70% in labor costs by outsourcing your non-core business operations and maximize business efficiency at the same time.
Let’s Discuss in Detail
When you hire an in-house team, not only are you paying higher salaries, but you are also bearing miscellaneous expenses related to employment benefits, including health insurance, retirement contributions, and more.
Moreover, the recruitment process, extensive training programs, extra office space, and furnishing expenses pile up over time, making your in-house team a significant financial burden.
In contrast, outsourcing agencies hire talent from developing regions where the cost of living is significantly lower, allowing them to pay significantly less than the US market.
The Benefits are Countless!
The financial benefits of outsourcing are substantial, but there is much more to it.
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Maximum Efficiency & Productivity
Outsourcing relieves your in-house team of extra workload, allowing them to focus solely on your core business operations.
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Access to Specialized Expertise
Outsourcing firms give you access to a skilled talent pool in various fields, and that too, at a cost that you can afford.
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Flexible Scalability
By partnering with an outsourcing firm, you can scale up to match the high seasonal demands and also scale down when the business is slow. This flexibility enables you to maintain efficiency at reduced costs.
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Improved Customer Satisfaction
Having dedicated outsourced customer support can improve customer satisfaction significantly by providing better quality services, omnichannel support, and swift turnaround times.
What’s the Future of Outsourcing in the US?
The US labor market has experienced a shortage since the COVID-19 pandemic and has around 3 million fewer workers compared to February 2020.
Companies are experiencing serious challenges in hunting for a skilled workforce, especially in the IT, healthcare, and engineering sectors. However, outsourcing talent has emerged as a core solution that gives companies access to top global talent and helps reduce costs and maximize efficiency.
Outsourcing companies are empowering businesses to focus on their core activities by helping them scale and adapt to the ever-changing market. This trend suggests a promising future for the outsourcing sector, as many businesses will realize the strategic value of outsourcing in driving efficiency and achieving core business objectives.
According to Research and Markets, the global outsourcing market is projected to generate $769.7 billion in 2024 and will reach a total market size of around $904.9 billion by 2027.
Conclusion
In short, outsourcing in 2024 is much more than saving on overhead costs; it is a strategic solution for addressing US labor shortages in various industrial sectors.
By partnering with a professional outsourcing firm, businesses can connect and work with top global markets, focus on their business growth,
Outsourcing in 2024 is not just a tactical move to save costs; it is a strategic imperative for businesses seeking to navigate the complexities of the current labor market. By embracing outsourcing, companies can access a global talent pool, gain cost efficiencies, focus on their core strengths, achieve operational flexibility, and mitigate risks. The evolving landscape of the labor market calls for innovative solutions, and outsourcing stands as a compelling answer to the challenges at hand.
As we move forward, businesses must embrace a strategic approach to outsourcing, carefully selecting their partners and defining their outsourcing objectives. By doing so, they can leverage the power of outsourcing to overcome the labor shortage, drive growth, and thrive in an increasingly competitive global marketplace. Outsourcing, once seen as a mere cost-saving measure, has come of age in 2024, transforming into a strategic enabler for businesses worldwide.
