Many companies ask the same question before outsourcing an activity: how do you calculate the ROI of outsourcing? Put simply, does delegating a function to an external provider really generate savings and create value, or does it just shift the costs?
The answer isn’t always straightforward. While outsourcing can cut direct expenses by up to 40% (source: Deloitte, 2024), it can also bring hidden effects: transition costs, quality management, vendor oversight. To make the right decision, you need a clear model to measure the return on investment (ROI).
In this article, we’ll explain how to calculate the ROI of outsourcing, which indicators to track, and share concrete use cases. The goal: to give executives, CFOs, and HR directors a simple and practical method to evaluate whether outsourcing is profitable based on their objectives.
How to Calculate the ROI of Outsourcing?
ROI (Return on Investment) is calculated with a simple formula:
ROI = (Benefits obtained – Total costs) ÷ Total costs x 100
In practice, you need to compare the savings achieved and the value created through outsourcing with the costs involved in implementing it.
Key elements to consider:
Internal costs avoided: salaries, social charges, HR management.
Outsourcing costs: provider’s fees, transition expenses.
Qualitative benefits: speed, quality, expertise, flexibility.
Hidden costs: contract management, quality control, potential risks.
💡 Example: An SME outsources its customer support. It saves €200,000 in internal costs per year. The provider costs €120,000, with €10,000 in transition fees. Net gain: €70,000, i.e. an ROI of 50%.
Which Indicators Should You Track to Measure ROI?
To effectively measure the ROI of outsourcing, you need to combine financial indicators with operational performance indicators.
Financial indicators:
Savings achieved (fixed cost reduction).
Change in operating margin.
Internal cost vs externalized cost comparison.
Operational indicators:
Customer satisfaction level (NPS, CSAT).
Request processing time.
Error or non-compliance rate.
Capacity to handle workload peaks.
💡 Concrete example: According to a Gartner report (2023), companies that outsourced their IT observed an average 30% cost reduction and a 25% improvement in execution speed.
Which Models Can Be Used to Evaluate Profitability?
There are several models to assess the profitability of outsourcing. The choice depends on your priorities: cost savings, quality, or innovation.
Cost-oriented model
Compare only internal vs external costs.
Simple, but ignores qualitative gains.
Value-added model
Includes quality, flexibility, customer satisfaction, and speed.
More complete but harder to measure.
Hybrid model
Combines direct costs + qualitative benefits with weighted indicators.
The most commonly used model in large enterprises.
💡 Example: A pharmaceutical company used the hybrid model to evaluate its R&D outsourcing. Result: a 35% ROI, plus faster time-to-market for its products.
Use Cases: ROI of Outsourcing Across Different Sectors
Customer Support
A French scale-up outsources its customer service to Morocco.
Cost reduction: –40%.
Response time improvement: +30%.
ROI in the first year: 55%.
IT and Software Development
A bank outsources part of its development to India.
Cost reduction: –50%.
24/7 availability thanks to time zone differences.
ROI over 3 years: 70%, despite high initial investment.
Accounting & Payroll
An SME outsources payroll to a specialized provider.
Compliance errors eliminated.
Administrative time reduced: –60%.
ROI over 2 years: 40%.
Calculating the ROI of outsourcing is essential for making informed decisions. The key is to go beyond direct costs and integrate qualitative benefits: speed, expertise, customer satisfaction, and flexibility.
On average, companies see an ROI of 30 to 60% depending on the outsourced functions. But to achieve this, it’s crucial to choose the right model (cost, value, or hybrid), define clear indicators, and monitor performance regularly.
👉 If you’re considering outsourcing, start by simulating ROI with your internal data. You’ll quickly know whether this decision is profitable—and more importantly, how soon.
