May 24, 2024

The Outsourcing Economy

The Outsourcing Economy

It’s no secret that many CEOs are looking for new ways to thrive in today’s economy. Outsourcing is turning out to be a popular part of the solution, according to the latest Marcum-Hofstra CEO survey, just released this week. Among the leaders surveyed, 29.1% reported increased outsourcing activities—driven largely by access to superior expertise and talent—and the most outsourced function was cybersecurity.

This approach makes a lot of sense, particularly in light of the concerns the survey revealed about an economic slowdown, interest rates, the cost of capital, and political uncertainty. Many middle-market businesses perform best when they stick to their core areas of expertise and rely on outside professionals for the rest. And with many contending with the labor shortage, relying on vendors can mean the difference between getting certain tasks done and failing to address them. When it comes to essentials like cybersecurity, failure is not an option.

On the positive side, there was a significant uptick in CEOs expressing the highest level of optimism about the business climate. The percentage rose to 13.9%, up from 8.6%. And 88.7% of CEOs expressed an outlook of 5 or higher on a scale of one to 10, with 10 being the highest. As you might expect, CEOs in some industries are more optimistic than others. Despite some contraction in the technology world, tech CEOs are the most optimistic (56%), while retailers, contending with supply chain challenges and inflation, are the least optimistic (18%).

Another trend that rang out loud and clear is the importance of business planning. 54.2% of CEOs said economic concerns are a top three influence on their efforts in this regard, up from 49.2%. We’re seeing this among many of our clients right now, with some consulting with their advisors in our firm on a regular basis.

With so many variables affecting the business environment, a company can’t have too many backup plans or do too much forecasting. Even if your leadership team never needs to implement your Plans J, K, and L, it doesn’t hurt to have them in place, and doing the thinking behind them is likely to unlock some unexpected innovation on your team.

On a separate note, we’re heading into Memorial Day weekend, and Monday is Memorial Day. As you read this I will be navigating traffic on the LIE (Long Island Expressway), heading out from NYC to Long Island for the weekend. Many of us will be honoring the men and women who died while serving in the U.S. military, whether by attending a parade or in a quiet moment of silence to thank these fallen service members for their commitment to protecting our country.

This weekend is also the unofficial start of summer for many people, with many beaches opening this weekend. Here in New York, summer weather has arrived, and it feels like many people have already headed out of town. If you’re not heading to the beach, it’s a great time to try a new local restaurant, hit the mall, or visit some local attractions that have been on your list. Happy Memorial Day, everyone!