Last Updated: January 6, 2023
That call centre worker you finally managed to get on the line with, is he physically in the UK? The security, canteen and cleaning staff on your university or company grounds, are they directly employed by this institution?
If similar questions crossed your mind, you’ve begun inquiring about outsourcing – a phenomenon steadily present in the UK’s economy. And now you’re in the right place to further expand your awareness of the subject, examining the outsourcing statistics UK we’ve had the pleasure of breaking down to you.
For starters, check out the most illustrative ones.
- The UK is the most open to offshore outsourcing and the least cautious about doing business with developing countries out of all European markets.
- In 2019, 67% of the UK’s start-ups outsourced in need of a skilled workforce.
- In 2019, almost 5% of Britain’s population were outsourced workers.
- 34% of UK based businesses outsourced IT support in 2019.
- 10% of UK businesses outsourced their marketing in 2020.
- 61% of British businesses outsource their payroll.
- 5% of businesses outsourced cyber-security in 2018.
- 73% of accountants in the UK approve of outsourcing.
- 71% of companies in the UK planned to outsource to reduce costs.
- In 2020, almost a third of UK businesses expected to outsource more.
Outsourcing Statistics UK
The UK is the most open to offshore outsourcing and the least cautious about doing business with developing countries out of all European markets
The nation’s cost-cutting corporate culture and historical ties to numerous countries around the world account for this openness. Since English is the official language of the United Kingdom, there are few linguistic barriers. As a result, offshore providers can reach the British market very easily.
23% of all public sector contracts in 2018 went to the sole bidder
Lack of good judgment is a trait many UK outsourcing companies had in common in recent years and was commonly manifested through expansion to areas where they lack expertise by pursuing new contracts or acquiring companies.
This, of course, is not to absolve the approach the UK’s government has had towards outsourcing, as it often gave contracts to the lowest bidder, regardless of how realistic their price was. The result is a market where tender winners are often unable to profit. By fulfilling the contract, outsourcing firms lose money and risk going under, as Carillion did in January of 2018.
Therefore, it is not surprising to see fewer and fewer companies bidding in public outsourcing markets. In 2018, there was only one bidder for almost a quarter (23%) of the government’s outsourcing deals.
In 2019, 67% of the UK’s start-ups outsourced in need of a skilled workforce
Of more than 3000 start-ups surveyed for Clockers, one of the biggest IT outsourcing companies in the UK, 56% resorted to outsourcing in order to manage Software-as-a-Service (SaaS) program development, application programming interface (API) integration and customer relationship management (CRM) systems.
40% cited time saved on recruitment as a motivator to outsource, and 28% felt outsourcing gave way to project management of greater efficiency. Looking for Eastern European workers stands out among IT outsourcing trends, as 62% of businesses did so.
71% of companies in the UK planned to outsource to reduce cost in 2021
Stats on outsourcing show that, of all the organisations that planned to increase their outsourcing efforts, 71% cited cost reduction as their primary motivator. For the public sector, this was less of a concern, as only 38% of public companies identified a reduction in cost as their primary objective when outsourcing.
Generally, the top reasons for outsourcing next to reducing costs were to transform business (50%) and improve the quality of service (50%).
Looking for a workforce within the UK, on the other hand, was motivated mainly by the desire to improve quality (88%) and the need for building and controlling intellectual property (63%).
There were 180,000 IT job positions in 2020
As London Technology Week had estimated, there should have been 850,000 IT job positions in 2020 in Europe. The UK’s share of this comes to around 180,000, meaning the British IT workers should have experienced an increase in their salaries as their projected number didn’t meet the market’s demand.
The options left to British companies are to either outsource or help skilled workers get a work visa for the EU. Whether these workers are from the EU or not is rendered irrelevant by Brexit.
In 2020, almost a third of UK businesses expected to outsource more
Perhaps concerned with the rise in tariffs expected after Brexit, when asked in 2020, almost a third (30%) of businesses in the UK anticipated increasing their outsourcing endeavours. Luckily, the trend went the other way, too, and 15% of organisations planned to ease down on their outsourcing. Let us also note that 19% could disclose neither the type nor the number of jobs they will outsource in the future.
Outsourcing Statistics UK by service type
Application outsourcing is expected to reach £7.5 billion in revenue by 2025
Application outsourcing lets companies reap all the benefits of fully operable enterprise applications with a lower IT budget and fewer employees, without a doubt increasing percentage points in statistics on jobs lost to outsourcing.
High-speed internet allowed many British companies to outsource customer and technical support, application maintenance and other jobs to developing countries. The revenue projection for 2021 was £6 billion, with an annual growth rate of 5.26%, leading to the £7.5 billion market volume estimate for 2025.
Contracts for the UK managed services in Europe, the Middle East and Africa amounted to almost £800 million in 2020
Taking into account only contracts exceeding £4m in value, the total value of managed services for British clients stood at £794 million in 2020.
On average, the values of traditional managed-service contracts grew by 10%, reaching £2 billion, and IT infrastructure and operations management (ITO) saw a 36% increase and amounted to £1.6 billion.
Almost 5% of Britain’s population were outsourced workers in 2019
2019 saw a large number of Britain’s outsourced workers protesting for treatment equal to the one their permanent colleagues enjoy. We couldn’t find relevant outsourcing jobs statistics, but the Trades Union Congress estimates that around 3.3 million workers in the UK were outsourced. They, more often than not, take lower-paid jobs.
Which companies outsource the most? One could argue that public ones do, but banks and retailers have followed the trend. In the case of University College London (UCL), outsourced workers are primarily employees of Sodexo and Axis, the big names in the UK outsourcing industry. Still, there are many other UK companies that outsource, such as Serco, Capita and Interserve.
Business process outsourcing should reach almost £22 billion in revenue by 2025
Business process outsourcing allows a company to devote its strengths to activities that make it stand out in the market. A process that doesn’t rely too much on management hierarchy, such as accounting, is likely to be outsourced. With an estimated growth rate of 6.21%, revenue in the business process outsourcing should rise from 2021’s projection of £17.1 billion to £21.8 billion by 2025.
The second quarter of 2019 saw outsourcing contracts worth £938 million signed
A 34% increase from the first quarter’s contract value has proved the UK outsourcing market to be a lively one. UK outsourcing industry growth is further illustrated through public sector spending that grew almost ten-fold, from £51 million in the first quarter to £489 million in the second.
Of all the deals considered, only 2% fell out of the BPO category, with customer service, HR, revenues and benefits comprising the majority of outsourced processes.
Application and network management and end-user computing saw the largest sums spent – £284 million, and the £118 million spent on work outsourced by manufacturing companies followed.
Outsourcing Statistics UK by function and industry
34% of UK based businesses outsourced IT support in 2019
YouGov reports that more than a third of British companies reached overseas to acquire a workforce in IT, making informational technologies the most outsourced function. As motivation for this, most (48%) cite a lack of necessary IT staff. Many (30%) say it yields better results or that it is cheaper, that it reduces staff costs (29%) or increases efficiency (28%).
The UK outsourcing figures show IT workers are not the only ones with stiff competition abroad, since 28% of company executives decided to outsource payroll, as reported in 2019. These decisions were primarily motivated by cost (41%) and deficiency in skilled staff (34%).
73% of the UK’s accountants admitted to a positive effect outsourcing could have
In a joint investigation that ForrestBrown and AccountancyAge led in 2020, outsourcing was shown to enjoy ever-increasing popularity in accountancy practices. A third (33%) of those surveyed admitted to outsourcing their bookkeeping services at least once. Moreover, almost two thirds (64%) agreed that to stay competitive, they have to outsource some higher-value services.
With 33% of respondents intending to do it within the next three years, outsourced bookkeeping is on its way to becoming another of many outsourcing facts other businesses will have to guide them. Also expected to be outsourced soon are payroll services (19%), expenses (15%) and the compliance function in its entirety (18%).
Outsourcing a call centre to South Africa saves almost £12,000 a year
For many world’s countries, South Africa is the go-to destination for business process outsourcing, predominantly for call centre outsourcing services (73%). With the annual costs of running a call centre in the UK amounting to over £17,000, and these costs standing at around £5,500 in South Africa, it is no wonder that 78% of all Africa’s southernmost country’s call centre services are resolving the problems of British customers.
10% of UK businesses outsourced their marketing in 2020
According to a study by LiveArea, conducted in April 2020, only 10% of businesses in the UK outsourced marketing at the time. Of those who weren’t outsourcing, 37% said they would consider outsourcing IT and 32% said they would consider outsourcing marketing as a result of the pandemic.
Advantages and risks of outsourcing in the UK
61% of British businesses outsourced their payroll in 2019
Compared to the costly in-house practice, outsourced payroll gives you the benefits of a secure and more affordable service that’s compliant with HMRC’s requirements.
Monthly, outsourced payroll usually takes £2 to £6 per employee. Naturally, quotes vary considerably depending on the number of employees. A firm of no more than ten people will have to set aside more per one employee to cover these costs than a firm with hundreds of workers.
Three times as many companies might outsource marketing after the pandemic
As Opinium and LiveArea found out, 28% of British companies consider outsourcing parts of their work due to Covid-19. The majority (37%) predicted outsourcing information technology positions. While 10% of brands outsourced their marketing when the research took place, three times as many (32%) companies might do so after the pandemic.
A little over one fifth (22%) of them claimed they’d consider outsourcing sales, and almost a quarter (24%) felt the same way about customer service.
5% of businesses outsourced cyber-security in 2018
The introduction of GDPR in May of 2018 drove many companies to make changes in their cyber-security, with over a third (36%) of them either building cyber-security policies and procedures from the ground up or updating them to meet the new regulation.
Other measures included additional staff training or communications (21%), deploying new systems (12%), firewall updating (6%), data encryption (5%) and lastly, cyber-security outsourcing (5%).
Having read so much about outsourcing trends and predictions, what can we expect in the times ahead?
Outsourcing statistics UK warn us – the phenomenon is here to stay and might become more common and more complex, with artificial intelligence and machine learning underway.
We, therefore, ought to prepare ourselves in order not to be taken by surprise when the day of accounting, customer service and finance completely outsourced, or automated, comes. A great skill to have will probably be the one of developing new skills.
“Do what you do best and outsource the rest” – Peter Drucker