Outsourcing Statistics 2022: In the US and Globally | TeamStage (2022)

Running a business can be expensive. Is there a more efficient way to reduce that cost than moving some of the work to people from other, cheaper parts of the world? Probably not.

The outsourcing statistics listed below will point out the good and the bad sides of this business, as we answer some of the key questions on the topic. By the way, outsourcing doesn’t always need to be financially motivated. The lack of expertise is just one of the other factors prompting companies to seek external professionals locally, nationally, or internationally. Read on to find out more.

Top Outsourcing Statistics: Editor’s Choice

  • The global outsourcing market was worth $92.5 billion in 2019.
  • 59% of companies outsource to cut costs.
  • Outsourcing accounts for 10% of the Philippines’ economy.
  • 37% of small businesses outsource at least part of their business process.
  • 80% of companies aren’t planning on outsourcing any sales or marketing jobs.
  • 14.3 million jobs are outsourced from the US.

Statistics on Outsourcing Rundown

1. 59% of companies outsource to cut costs.

Cost-cutting is the most common reason that makes organizations turn to outsourcing. More than half of businesses take this step in a bid to reduce the weight on their budgets. Other reasons include:

  • Enabling focus on core business (57%);
  • Solving capacity issues (47%);
  • Improving service quality (31%);
  • Meeting business needs (28%).

2. The global outsourcing market was worth $92.5 billion in 2019.

Outsourcing statistics by year show that in 2019, the value of global outsourcing services reached $92.5 billion. Compared to 2018, the market grew by just over 8%. Still, the value of outsourcing services provided around the world remains far from the 2014 record of $104.6 billion.

3. India is the top global outsourcing destination.

Outsourcing statistics by country put India on top of the list of global outsourcing providers, with much of the industry being concentrated in the cities of Bangalore, Mumbai, and Delhi. The global top 5 of BPO destinations is rounded up by China, Malaysia, Indonesia, and Brazil.

4. Outsourcing accounts for 10% of the Philippines’ economy.

Offshoring customer service is standard practice for thousands of businesses around the world. Stats on outsourcing show India has always been the leading market for call centers.

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For the past five years, however, the Philippines has been strengthening its foothold in the game, as outsourcing has become one of the major contributors to this country’s economy. According to estimates, the country’s BPO industry employs over 1.2 million people.

5. 37% of small businesses outsource at least part of their business processes.

Over a third of small businesses use outsourcing, according to a 2019 study by Clutch. 52% of participants in the outsourcing survey plan on contracting out a business process in the near future. The small business outsourcing statistics are based on the answers of 529 market players.

6. 37% of businesses that outsource list accounting as one of their outsourced processes.

Accounting is the most commonly outsourced business aspect, at least among small businesses. The top 5 list also includes IT services (37%), digital marketing (34%), development (28%), and HR (24%).

7. 65% of companies that outsourced in the past are planning to increase outsourcing.

Outsourcing statistics by industry show that the majority of organizations—especially those in the manufacturing and IT business—plan on increasing their outsourcing efforts. Once they experience the financial benefits of this practice, just 35% of companies don’t plan to expand on it.

8. Ukraine has over 200,000 IT workers.

Ukraine boasts the fastest-growing number of IT professionals in Central and Eastern Europe. IT outsourcing statistics put the number of those workers in the country at over 200,000, potentially turning Ukraine into the next big market for the IT outsourcing industry.

9. 80% of companies aren’t planning on outsourcing any sales or marketing jobs.

There are some positions that organizations tend to avoid outsourcing. Sales and marketing are two of them. Strategic planning is also among the activities that 89% of businesses would not consider entrusting to external vendors.

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10. Over 1 million outsourced jobs are in danger due to automation.

All previous job outsourcing statistics could be overshadowed by a new development in the industry: repetitive and/or low-skilled jobs that have been outsourced are now at risk due to automation. Estimates show that, in the next five years, automation could ax some 1 million jobs in the US, Poland, India, and the Philippines.

11. The global HR outsourcing market is expected to grow at a CAGR of 8.69% until 2022.

Despite the previous stat, HR outsourcing statistics are showing no signs of slowing down. Since 2018, the industry has been expanding steadily at a compound annual growth rate of 8.69%. The trend is expected to continue at least until 2022.

12. 93% of companies have adopted cloud services to optimize outsourcing.

In order to streamline their outsourcing efforts, 93% of organizations have either adopted or are considering adopting cloud-based solutions. These solutions might help with control and coordination, but they come with some risks, particularly when it comes to protecting sensitive data. This is why 68% of these organizations cite security as their primary concern.

US Outsourcing Statistics

13. More than 84% of outsourcing deals come from the US.

The US is responsible for the lion’s share of outsourcing deals. The country alone accounts for 84.2% of the $92.5 billion spent on BPO services globally. On a regional level, North and South America attract 42% of overseas outsourcing buyers.

Europe, the Middle East, and Africa together account for 35% of deals in the industry, while Asia and Oceania hold a 23% share.

14. Every year, US businesses outsource about 300,000 jobs.

These offshore outsourcing statistics give a clear indication of the scale of BPO. In 2015 alone, US foreign affiliates hired 14.3 million workers overseas. If those outsourced jobs stayed in the US, they would be enough to hire the 5.9 unemployed Americans, plus 4.3 million of those who are working part-time and want to switch to a full-time position.

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15. 29% of US businesses with less than 50 workers outsource.

Outsourcing in the USA is much less common among businesses that have 50 or fewer employees. Just 29% of them outsource. Companies that employ more than 50 workers, on the other hand, are much keener to take some of their work outside: outsourcing statistics show that 66% of them do so.

16. 71% of Americans think that outsourcing harms the US economy.

While organizations across the world enjoy the benefits of outsourcing, most members of the US population agree that it is harming the economy. 71% of Americans think that outsourcing has a negative impact, and 62% want the government to ban it altogether.

17. California has lost 654,000 jobs to China since 2001.

Jobs lost to outsourcing statistics show that, between 2001 and 2018, California lost 654,000 jobs to China. Texas is next on the list with 335,000 displaced jobs, followed by New York with 185,100 lost workplaces. Directly or indirectly, China is responsible for the loss of 3.7 million jobs in the US.

Frequently Asked Questions

What is global outsourcing?

Global outsourcing is a business practice where a company decides to task a third party with dealing with some of its services or job functions. Companies can decide to outsource a small part of their operations (for example, QA testing), or their entire divisions (for example, IT).

Depending on where it takes place, outsourcing can be onshore (within the country), nearshore (to a nearby country), or offshore (to a remote country).

How big is the outsourcing industry?

The outsourcing market saw $92.5 billion worth of services during 2019, growing at a significant annual rate of 8%. However, the outsourcing industry reached its peak in 2014, when the world spent a total of $104.6 billion on BPO services.

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What are the advantages of outsourcing?

Companies that outsource do so mainly as a cost-cutting effort. Around 59% of businesses that outsource say saving money is one of the reasons behind their decision. Reducing spendings on labor, operation, and overhead is, arguably, the biggest benefit of BPO. Other advantages include improved efficiency, freeing up internal resources, and mitigating risks by sharing difficult tasks.

What are the negative effects of outsourcing?

International outsourcing doesn’t come without risks and negative sides. The danger of losing sensitive data is always there when you work with third parties. Lack of quality control is also a common fear shared by businesses that outsource.

What are the most outsourced jobs?

Accounting-related and IT jobs are the most outsourced ones, with 37% of businesses that outsource listing them as one of the operations that they contract out. Digital marketing jobs are outsourced by 34% of these businesses, followed by development-related activities (28%), and HR (24%). The list of jobs that can be outsourced is virtually endless.

Which countries outsource the most?

Outsourcing research shows that India, China, and Malaysia are the biggest outsourcing destinations in the world. The country that outsources the most is the US, where more than 84% of all BPO deals are made. The UK is at the other end, accounting for around 5% of the deals.

How many US jobs have been outsourced?

In order to find the appropriate workforce or cut costs, US businesses have outsourced 14.3 million jobs. If these jobs had stayed within the country, they would have been more than enough to cover local unemployment: there are currently 5.9 million jobless people in America, as well as 4.3 million part-time workers who want to transition into full-time work.

How many jobs are outsourced to India?

As mentioned above, India is the largest market for businesses looking to outsource. Even though the exact number of BPO jobs in India is not available, we can expect it to keep growing, as the cost of local labor remains far lower than the average global standards.

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Conclusion

Outsourcing is an excellent way to reduce the costs of running a business. It is also a smart lever to improve efficiency by freeing up internal resources and mitigating risk. However, it does come with some negative sides. Should you outsource or you should rather count on your own staff to deal with all or some of your non-core operations? The decision is up to you. Take your time to carefully tick all the pros and cons. Consult the experts, do your numbers, and feel free to use our list of outsourcing statistics as a guide.

Sources

customer think,Statista,Time Doctor,Clutch,superstaff,Outsourcing Insight,Ukraine Digital News,Booth & Partners,Kearney,PR Newswire,Deloitte,Medium,Entrepreneur,the balance,Time Doctor,bizfluent, US News

FAQs

How much of US work is outsourced? ›

Roughly 4.5% American jobs are outsourced each year.

While the U.S. added a record 6.4 million new jobs at home in 2021, it also outsourced about 300,000 jobs to other countries. So of the 6.7 million total jobs America created in 2021, approximately 95.5% of them went to Americans and 4.5% were outsourced.

Which country outsources the most? ›

The US has the most percentage of outsourced jobs in the world, with almost 68% of companies delegating their services. The UK, meanwhile, has around 48% of companies offshoring business functions with talent shortage as the main factor.

How many US companies are outsourced? ›

There are 277,120 Business Process Outsourcing Services businesses in the US as of 2022, an increase of 4.9% from 2021.

Is outsourcing a global trend? ›

The outsourcing industry has become one of the fastest-growing sectors in the global business ecosystem.

Is outsourcing in the US increasing or decreasing? ›

Despite, or perhaps because of the COVID-19 pandemic, the percentage of their budget IT departments spend on outsourcing continued to rise from 12.7% in 2019 to 13.6% in 2020.

How many US jobs are lost due to outsourcing? ›

More than 300,000 American jobs have been lost to offshoring and trade during Trump's presidency, as certified by the Labor Department. The Economic Policy Institute said total trade job loss is much higher — estimating 700,000 jobs lost to China alone in Trump's first two years.

Where does the US outsource to? ›

American companies send IT jobs to India and China because the skills are similar while the wages are much lower. Companies in Silicon Valley outsource tech jobs by offering H-1B visas to foreign-born workers.

What are the major sector for outsourcing? ›

Information Technology and Communication, Medical and Health Sector, Insurance, Law and Jurisdiction, Finance are some of the sectors where the majority of outsourcing work is performed.

How big is the outsourcing industry? ›

b. The global business process outsourcing market size was estimated at USD 245.91 billion in 2021 and is expected to reach USD 261.9 billion in 2022.
...
Report AttributeDetails
Market size value in 2022USD 261.9 billion
Revenue forecast in 2030USD 525.2 billion
Growth RateCAGR of 9.1% from 2022 to 2030
11 more rows

What percentage of businesses outsource? ›

Small business outsourcing statistics show 52% of small businesses planned to outsource processes in 2019. In 2018, 37% of small businesses were outsourcing business processes. Two of the most outsourced areas are accounting and the IT outsourcing industry with 37% each, followed by digital marketing with 34%.

What products does the US outsource? ›

We also outsource a massive amount of food and goods.
...
Take time today to familiarize yourself with the types of goods America outsources and come up with a plan to prepare for shortages.
  • Fruit, Vegetables, and Meat. ...
  • Energy Sources. ...
  • Medical Supplies. ...
  • Alcohol. ...
  • Communication Devices.
19 May 2022

What are the recent trends in outsourcing? ›

Outsourcing Trends in 2022
  • Increased preference for remote work.
  • Greater demand for building global teams.
  • Enhanced focus on strategic partnerships.
  • Greater emphasis on cybersecurity.
  • Rise of Progressive Web Apps.
  • Demand for cloud-based technology.
  • Renewed interest in industry specialisation.
  • Keeping Up with the Trends.
12 Jan 2022

Why do companies outsource statistics? ›

The number one reason for outsourcing for 70% of companies is cost reduction, as outsourcing lowers the costs associated with hiring in-house staff. Around 24% of small companies say they outsource to increase efficiency levels. Many small businesses also use outsourcing to access specialist skills.

What are the benefits of outsourcing? ›

Outsourcing benefits and costs
  • lower costs (due to economies of scale or lower labor rates)
  • increased efficiency.
  • variable capacity.
  • increased focus on strategy/core competencies.
  • access to skills or resources.
  • increased flexibility to meet changing business and commercial conditions.
  • accelerated time to market.
6 Nov 2017

Why is BPO a trend? ›

Smaller transactions, hybrid outsourcing, increased governance needs, and lower-cost consultant models have all become more common in the BPO market. Various advantages of BPO include cost savings, enhanced customer service, better focus on core operations, competitive capacities, and speed to market.

How is outsourcing affecting the US? ›

Outsourcing by American corporations has caused permanent damage to American workers, manufacturing, supplier companies, and the living standards of many families. It may lead to short-term profits for the corporation but eventually the corporation will lose the technology and the market to its foreign competitors.

Is outsourcing declining? ›

As shown in Figure 1 from the full study, the percentage of the total IT budget being spent on outsourcing declined from 11.9% in 2017 to 9.4% in 2018. This represents a major decrease even from previously established norms as organizations have hovered between 10.2% and 10.6% before last year's temporary increase.

Is outsourcing good or bad for America? ›

outsourcing is truly a mutually beneficial trade. Global trade like outsourcing allows America to thrive in its most efficient areas, thus creating more productivity and wealth. According to the Social Security Administration, 51% of American workers are now making less than $30,000 a year.

Where are most US jobs outsourced to? ›

What percentage of US companies outsource? 68% of US companies outsource to low-cost countries. The most outsourced services are accounting, IT service, digital marketing, development, human resources, and customer support.

How many US jobs are offshored? ›

Blinder estimates that about 30 million jobs, accounting for a little more than one-fifth of the U.S. workforce, are vulnerable to offshoring.

Why does the US outsource to China? ›

American companies benefit from outsourcing manufacturing to China. The most common reason for outsource manufacturing is the reduction of cost. American companies outsource manufacturing to China to have their goods assembled, or completely built overseas, at incredibly low costs.

Why do US companies outsource to India? ›

India has been one of the leading outsourcing destinations due to low costs, 24/7 service, a highly-experienced workforce, a vast talent pool, and continuous support from the government. Based on studies, the majority of companies in the West are already outsourcing to India.

Why do American companies manufacture overseas? ›

Overseas manufacturing, because it is less expensive, allows for goods to be produced in very large volumes. Volume ensures that businesses and companies are able to meet their market needs every time. The ability to consistently mass produce and meet demand is crucial to a company's success.

When did US offshoring begin? ›

Actually, the term dates to the 1970s, when manufacturing companies seeking efficiency began hiring outside firms to manage less-than-essential processes. Outsourcing worked. Today many manufacturers outsource 70% to 80% of the content of their finished products.

What are the 2 types of outsourcing? ›

The Two Most-Popular Types of Outsourcing in Software Development. IT Staff Augmentation and Dedicated Teams are the two types of outsourcing that have revolutionized software development.

What are some examples of outsourcing? ›

Outsourcing examples include:
  • Manufacturing.
  • Customer service.
  • Business development and sales.
  • Marketing and advertising.
  • Accounts receivable collections.
19 Mar 2019

What is the largest BPO company in the world? ›

Let's take a look at the top ten BPO companies in the world in no particular order.
  1. Accenture. Accenture is a cutting-edge IT company as well as a BPO offering a talented workforce. ...
  2. Cognizant. ...
  3. Concentrix. ...
  4. DOXA. ...
  5. Wipro. ...
  6. Genpact. ...
  7. EXL Service. ...
  8. Teleperformance.

What is global outsourcing? ›

Global outsourcing allows companies to find partners in various regions of the world to execute some (or even all) of its work for either financial or operational reasons, or both.

Is the BPO industry growing? ›

In fact, according to a study conducted by Oxford Business Group, the BPO sector has grown so vastly, it is considered to be one of the “two legs” of the country's economy, alongside with remittances from OFWs*.

Which country is the leader today in global BPO market? ›

India has been hailed as the leader in business process outsourcing (BPO) market due to its low-cost labor, skilled workforce and Geographic advantage.

Why has outsourcing increased? ›

Reasons for outsourcing mainly include lowering a company's costs, reducing the investments of an enterprise in capital expenditures, reducing the need for in-house staff training, and generally improving the utilization of a company's resources.

Did you know facts about outsourcing? ›

Facts and Statistics
  • In 2019, the worldwide outsourcing market was worth $92.5 billion.
  • The top reason for outsourcing (59%) is to save money and cut costs.
  • 14.3 million is the number of workers US overseas affiliates hired back in 2015.
  • In 2017, a whopping 84.2% of outsourcing deals came from the States.
18 Jan 2021

Are more companies outsourcing? ›

More than one-third of all small businesses already outsource at least one business process. Plus, as of 2019, more than half intend to outsource one or more business processes in the future.

Which 5 companies do the most overseas manufacturing? ›

Which Five Companies Do The Most Overseas Manufacturing?
  • Apple. Apple's relationship with the Chinese manufacturing firm Foxconn is well known. ...
  • IBM. ...
  • Cisco Systems. ...
  • Nike. ...
  • Wal-Mart.

Which position is most easily outsourced? ›

If you are considering outsourcing in your business, here are the most commonly outsourced jobs.
  • Manufacturing. ...
  • Customer Service. ...
  • Information Technology. ...
  • Content Creation. ...
  • Marketing. ...
  • Human Resources. ...
  • Accounting. ...
  • These Are the Most Commonly Outsourced Jobs.
15 Sept 2020

What companies have benefited from outsourcing? ›

Here are six highly-successful companies that have used outsourcing for their software development to grow their business.
  • Slack. The web interface of this favorite corporate communication tool was designed mainly by MetaLab, a design firm. ...
  • GitHub. ...
  • Skype. ...
  • App Sumo. ...
  • BaseCamp. ...
  • Alibaba.
15 Aug 2018

What are the best practices for outsourcing? ›

6 Best Practices in Outsourcing
  • Define your outsourcing goals early. ...
  • Select the right outsourcing engagement model. ...
  • Work with the right outsourcing service provider. ...
  • Start with teams as small as one to two. ...
  • Establish a clear communication process. ...
  • Provide the right training materials and tools.
31 May 2022

WHAT IT function has the largest percentage of work outsourced? ›

Application development is the most-frequently outsourced function in the study. In these times of relatively good economic growth, 37% of organizations that outsource this function are planning to increase the amount of work they outsource.

Why is outsourcing bad for the economy? ›

Outsourcing has caused high unemployment, loss of income and loss of competitive advantage, leaving people without financial support and employment.

How much is outsourcing worth? ›

2. The global outsourcing market was worth $92.5 billion in 2019. Outsourcing statistics by year show that in 2019, the value of global outsourcing services reached $92.5 billion. Compared to 2018, the market grew by just over 8%.

What are the Top 5 reasons companies use outsourcing? ›

Why Do Businesses Outsource?
  • Reduce and control costs of operation (this usually the main reason).
  • Improve the company's focus.
  • Liberate inner sources for new purposes.
  • Increase efficiency for some time-consuming functions that the company may lack resources for.
  • Use external resources as much as possible.

What are 3 disadvantages of outsourcing? ›

Disadvantages of Outsourcing
  • You Lose Some Control. ...
  • There are Hidden Costs. ...
  • There are Security Risks. ...
  • You Reduce Quality Control. ...
  • You Share Financial Burdens. ...
  • You Risk Public Backlash. ...
  • You Shift Time Frames. ...
  • You Can Lose Your Focus.
21 Feb 2017

Why BPO is the fastest growing industry? ›

In India, Business Process Outsourcing (BPO) is the fastest growing segment of the ITES (Information Technology Enabled Services) industry. Factors such as economy of scale, business risk mitigation, cost advantage, utilization improvement and superior competency have all lead to the growth of the Indian BPO industry.

What is the future of business process outsourcing? ›

CAGR [compound annual growth rate] of over 7%” between 2020 and 2024. The report summary further notes that “the business process outsourcing market size has the potential to grow by US$76.90 billion during 2020–2024” and that its market growth momentum could accelerate.

How has BPO changed the world today? ›

BPO has made running a business easier, helped mitigate risk, increase quality assurance, reduce storage and operational costs, streamlined compliance efforts, and more. In fact, in a recent survey, 59% of business executives globally said they rely on outsourcing services to reduce costs.

Where are most US jobs outsourced to? ›

What percentage of US companies outsource? 68% of US companies outsource to low-cost countries. The most outsourced services are accounting, IT service, digital marketing, development, human resources, and customer support.

Has outsourcing hurt the US economy? ›

Outsourcing by American corporations has caused permanent damage to American workers, manufacturing, supplier companies, and the living standards of many families. It may lead to short-term profits for the corporation but eventually the corporation will lose the technology and the market to its foreign competitors.

Is outsourcing good for the US economy? ›

Job outsourcing helps U.S. companies be more competitive in the global marketplace. It allows them to sell to foreign markets with overseas branches. They keep labor costs low by hiring in emerging markets with lower standards of living. That lowers prices on the goods they ship back to the United States.

Why do US companies outsource to India? ›

India has been one of the leading outsourcing destinations due to low costs, 24/7 service, a highly-experienced workforce, a vast talent pool, and continuous support from the government. Based on studies, the majority of companies in the West are already outsourcing to India.

How big is the outsourcing industry? ›

b. The global business process outsourcing market size was estimated at USD 245.91 billion in 2021 and is expected to reach USD 261.9 billion in 2022.
...
Report AttributeDetails
Market size value in 2022USD 261.9 billion
Revenue forecast in 2030USD 525.2 billion
Growth RateCAGR of 9.1% from 2022 to 2030
11 more rows

What are the recent trends in outsourcing? ›

Outsourcing Trends in 2022
  • Increased preference for remote work.
  • Greater demand for building global teams.
  • Enhanced focus on strategic partnerships.
  • Greater emphasis on cybersecurity.
  • Rise of Progressive Web Apps.
  • Demand for cloud-based technology.
  • Renewed interest in industry specialisation.
  • Keeping Up with the Trends.
12 Jan 2022

How many US jobs are offshored? ›

Blinder estimates that about 30 million jobs, accounting for a little more than one-fifth of the U.S. workforce, are vulnerable to offshoring.

Is outsourcing a problem or is it good for America? ›

Yes… outsourcing is truly a mutually beneficial trade. Global trade like outsourcing allows America to thrive in its most efficient areas, thus creating more productivity and wealth. According to the Social Security Administration, 51% of American workers are now making less than $30,000 a year.

Who is hurt by outsourcing? ›

Outsourcing Lowers Barriers to Entry and Increases Competition. While increased competition is encouraged by free markets and generally benefits consumers, it can hurt businesses that can't keep up. Outsourcing allows new entrants to industries where labor would have been too expensive otherwise.

Is outsourcing good or bad for American workers? ›

It is true that outsourcing has led to job loss in the US, and has had a detrimental effect on those people who may be only minimally qualified to work. It's also the case that there are plenty of skilled labor jobs being outsourced to foreign countries. The loss is not only to people with minimal job skills.

What are benefits of outsourcing to the America? ›

Hungry US consumers can get products at cheaper prices, and countries with a large labor pool can invest in developing detailed manufacturing processes. Furthermore, outsourcing is beneficial to the US economy, because it allows the US to get goods and services at cheap prices.

Is outsourcing declining? ›

As shown in Figure 1 from the full study, the percentage of the total IT budget being spent on outsourcing declined from 11.9% in 2017 to 9.4% in 2018. This represents a major decrease even from previously established norms as organizations have hovered between 10.2% and 10.6% before last year's temporary increase.

What is the impact of outsourcing on an economy? ›

When the US outsources to foreign countries, it pours significant investments into those countries which allows them to boost their economy. In turn, those same countries are able to become a bigger player on the global market and are now able to buy more exports from the US.

How does Nike use outsourcing? ›

Nike + outsourcing = competitive advantage

Nike has no manufacturing plants of its own but chooses to outsource the work to contractors in the Philippines, Vietnam, China, Indonesia, and Taiwan. There are 500,000 people worldwide involved in the production of Nike footwear.

Does Microsoft outsource? ›

Microsoft Continues to Outsource Internal Support and Services.

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