More middle-market firms embrace outsourcing for critical functions: Marcum-Hofstra survey
NEW YORK, UNITED STATES — More middle-market firms — companies with annual revenues between $10 million to $1 billion — are relying on outsourcing for their critical business functions.
According to a survey by accounting and advisory firm Marcum LLP, in collaboration with Hofstra University, 29.1% of CEOs reported a rise in outsourcing activities compared to their traditional methods.
Cybersecurity leads outsourced functions
Cybersecurity has emerged as the most frequently outsourced function, with 17.9% of companies primarily depending on external expertise to safeguard their data and information systems.
In contrast, human resources remained the least outsourced function, with only 4.8% of CEOs opting for external services.
Access to expertise and cost savings drive outsourcing decisions
The survey revealed that over half (50.2%) of the CEOs cited access to superior expertise and talent as the primary motivation for outsourcing. Other significant factors included cost savings (27.9%) and improved efficiencies (20.3%).
“With talent in short supply and margins growing tighter, the advantages of outsourcing are becoming clearer than ever,” said Jeffrey Weiner, Chairman & CEO of Marcum LLP.
“Every day, more businesses are waking up to the reality that the specialized expertise of outside partners can relieve some of the day-to-day burden and enable organizations to concentrate their efforts where they’re most effective, which helps to drive growth and innovation,” Weiner added.
Business environment and planning influences
The Marcum-Hofstra CEO Survey also provides a nuanced view of the current business climate. Key findings include:
- Business optimism. The percentage of CEOs expressing the highest level of optimism (“10”) about the current business climate has risen significantly (13.9%, up from 8.6%). The majority of CEOs (88.7%) also maintain a rating of 5 or higher regarding their outlook, with the weighted average remaining steady at 6.9.
- Industry-specific optimism. Optimism varies by industry, with technology remaining relatively high (56%), construction experiencing a decline (33%), and retailing witnessing the most significant drop in optimism to 18%.
- Economic concerns. Economic concerns continue to dominate, with 54.2% of CEOs indicating it as a top-three influence on planning efforts, up from 49.2% in the previous survey. The availability of talent (38.2%) has overtaken rising material and operational costs (35.1%) as the second most prominent concern for CEOs.
External issues of concern
CEOs also highlighted several external issues of concern, including:
- Economic slowdown (45.0%)
- Interest rates and the cost of capital (42.7%)
- Political uncertainty (35.8%)
- Other notable worries include supply chain challenges, rising energy costs, labor shortages, and increasing customer expectations.
The Marcum-Hofstra CEO Survey is a periodic assessment of mid-market CEOs’ outlook and priorities for the next 12 months.
The survey included the leaders of companies with revenues ranging from $5 million to $1 billion-plus and was conducted the week of April 29, 2024, with 251 mid-market CEOs participating.
“The insights from our joint CEO Survey with Marcum LLP underscore the value of outsourcing as a critical tool for CEOs looking to harness external expertise while maintaining internal focus and agility,” remarked Dr. Andrew Forman, associate professor of international business and marketing at Hofstra University.
“Understanding the changing tides of the business landscape is key to preparing tomorrow’s leaders,” added Janet Lenaghan, dean of the Hofstra University Zarb School of Business.
