Construction Outsourcing Trends: What to Expect in 2023

April 28, 2023
|By Gretel Digo

The global construction industry is growing every year, with projects becoming more complex. However, the demand for skilled talent is outstripping supply, driving many companies to seek help from external staffing, technology and solutions providers. Depicted below are major trends that are expected to drive construction outsourcing decision-making in 2023.

1. Long-term Industry Growth

The global construction industry is expected to experience steady revenue growth in the coming years, with projections indicating that it will more than double in size from 2020 to 2030. In 2020, the construction market was valued at 6.4 trillion U.S. dollars, and by 2030, it is estimated to reach 14.4 trillion U.S. dollars.

The global construction industry is primarily fueled by major players in the field such as China, the US, and India. Although China faced challenges in real estate, it is expected to pick up pace by 2025. In contrast, the US has experienced a decline in residential work, which may result in a significant blow to the industry, creating a $150 billion hole and affecting its growth prospects. India is projected to be the fastest growing superpower in the construction sector, while the UK is anticipated to be the fastest growing country in Western Europe for construction work.

2. Skills Shortage

According to a report by Associated Builders and Contractors (ABC), the construction industry in the United States is facing a significant workforce shortage. The report states that the industry currently faces a shortage of 430,000 workers, and this number is expected to increase to 560,000 by 2023. This shortage is attributed to various factors such as an aging workforce, lack of training programs, and low interest among young people to pursue a career in construction. 

The workforce shortage in the construction industry is the reason why many firms will continue to partner with third-party firms that provide staffing and other construction support services. Outsourced staffing is expected to continue in 2023 and the coming years to fill the need for qualified engineers, architects, consultants and construction workers. Offshore virtual assistants and support staff will also be in demand, particularly for smaller firms looking to scale up their workforce at a cost-effective rate.

3. Increased Outsourcing Activity

Due to the prevailing labor shortage in the construction sector, companies will continue to outsource staffing and support services (and complex, strategic services to a lesser extent) to third parties in 2023. The need for external help is great as owners require additional and temporary employees, especially project management specialists, craft labor workers and construction planners.

    4. Modular Construction

    Modular construction generally entails fabricating a minimum of 60-90% of a building or any other structure off-site before relocating it to the construction location. The global modular construction market is expected to grow to $108.8 billion by 2025.

    Modular construction is a process that has gained popularity in recent years, and it involves assembling large portions of a building or structure off-site in a controlled environment. This technique allows for faster completion times, increased efficiency, and cost savings.

    By constructing a significant portion of the building off-site, modular construction reduces the amount of on-site work that needs to be completed, which can help to minimize the impact of weather delays and other unexpected setbacks. Additionally, since the building components are assembled in a factory-like setting, the quality of the finished product is often higher and more consistent.

    Outsourcing is also an important aspect of modular construction. Since a significant portion of the building is constructed off-site, the manufacturing process can be outsourced to specialized companies that have the necessary expertise and equipment. This outsourcing can help to reduce costs, improve efficiency, and ensure that the finished product meets the necessary quality standards.

      5. Green Building

      The US green buildings market is expected to reach $103.08 billion by 2023 at a CAGR of 9.3%.

      Green building is a construction and design approach that prioritizes environmental sustainability by using eco-friendly materials and practices. This approach has become increasingly popular in response to the global trend of governments and regulatory bodies emphasizing environmental considerations in all industries. As a result, more construction and design firms are adopting green building methods.

      By 2023, it is anticipated that outsourcing will play a significant role in the US green buildings market as construction and design firms increasingly rely on outsourcing to streamline processes and reduce costs, while still meeting the high sustainability standards set by regulators and customers.

      6. Increased Technology Adoption

      In recent years, the construction industry has seen a surge in the adoption of a wide range of innovative technologies. These technologies are being used to improve efficiency, reduce costs, and enhance the quality of construction projects. Some of these technologies are as follows:

      Virtual Design and Construction (VDC)

      VDC is a virtual technology that allows you to visualize the construction of structures in virtual environments before they are physically built. It uses advanced 3D modeling  and simulation techniques to plan and execute construction projects, allowing for more accurate project estimates, better communication between project stakeholders, and greater efficiency in the construction process. 

      Furthermore, VDC enables collaboration between teams and better coordination of different project phases, reducing errors and rework. The integration of VDC with other emerging technologies such as Artificial Intelligence (AI) and Augmented Reality (AR) is also expected to enhance construction project outcomes further. As technology continues to advance, the construction industry will continue to evolve, with innovative solutions driving improved performance and sustainability.

      Building Information Modeling (BIM)

      Building Information Modeling is a virtual design and VDC construction tool that uses 3D modeling software to create a virtual representation of a building’s physical and functional characteristics. This technology allows enhanced collaboration, efficiency, and accuracy in the design, construction, and management of the building project.

      Drones

      Drones are used to capture high-quality images and survey construction sites, improving site inspections, and progress monitoring. The utilization of drones for real-time measurement of stockpiles of building materials has led to a 61% improvement in measurement accuracy.

      In addition, robotics and automation are being employed in the construction process, with machines capable of performing repetitive and dangerous tasks, thus increasing worker safety and productivity.

      3D Printing

      The market for 3D printing in the construction industry is expanding rapidly, with a projected Compound Annual Growth Rate (CAGR) of 100.7% until the year 2030.

      3D printers have greatly improved in terms of speed, quality and features. Materials such as concrete, geopolymers, fiber and sand can be used. Certain creators have gone as far as incorporating eco-friendly materials such as mud, soil, and straw into the production of 3D-printed houses. 3D printing helps contractors reduce building time and costs. An American startup, for example, is said to be using the world’s largest free-form 3D printer to build walls for new residential homes. Many contractors are also experimenting with off-site construction methods to reduce build time and cost for residential and commercial projects. One company plans to develop construction kits containing pre-cut fixtures, windows, panels and majority of other required materials to the local contractor who will build the house.

      To learn more about outsourcing, you can read our Top 8 Qualities of an Outsourcing Company in the Philippines article. We invite you to follow us on social media and to visit our website to learn more about our services.

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