UK Trends in Back Office Outsourcing
Businesses in the United Kingdom have been outsourcing back-office functions for at least the last five years, during which it has been a strategy filtering down from the largest enterprises to become a feature of medium-sized and small businesses too.
But what are the current trends in back-office outsourcing in the UK?
You will find a few of the most important ones outlined in the following paragraphs, which might be of interest if you are thinking of hiring a VA or adopting an outsourcing strategy for your enterprise.
Which Industries are Outsourcing?
While back-office outsourcing in the UK has become popular, it is particularly prevalent within a handful of specific industries. The banking and financial services sector is one such industry, with many larger organizations outsourcing to BPO providers, while the use of virtual assistants is popular with SMBs selling consumer products and services.
Outsourcing is also common among management consulting organizations in the United Kingdom, with larger companies using BPO service providers and small businesses and independent consultants often hiring virtual assistants to handle back-office activities.
What is Being Outsourced?
Businesses in the United Kingdom, along with those in Finland and Spain, are more likely to make use of BPO providers and virtual assistants than enterprises in other European countries.
The business activities most likely to be outsourced by UK companies are those connected with IT, such as application development and helpdesk services.
Payroll, bookkeeping, and accounting activity are also commonly outsourced, and some businesses outsource human resources management, procurement, and even sales processes, but to a lesser degree than IT and accounting.
Common Reasons for Businesses to Outsource
According to data from Deloitte released in 2016, 59% of businesses cite financial savings as a key outsourcing benefit and objective, making cost the number one driver for accessing external back-office services.
By engaging BPO services, large enterprises can achieve a lower fixed cost base, while UK startups can decrease the cost of scaling up by hiring VAs, for whom they do not have to provide office facilities or incur the expenses associated with recruiting and retaining employees in-house.
Along with the cost advantages, UK businesses are turning to virtual assistants and other business outsourcing solutions to improve or maintain their internal focus on core, value-adding elements of their operations. The majority of businesses (57%) using outsourced services quote this a key motivation, while 47% say they outsource to access specific capabilities that would otherwise be too expensive or complicated to build internally.
How is Brexit Affecting Back Office Outsourcing?
Of course, no article on UK outsourcing would be complete without a mention of the country’s imminent departure from the European Union, since Brexit is a monolithic event placing a strain on all British businesses.
Perhaps surprisingly though, UK outsourcing market does not appear to have been significantly affected by Brexit. Between 2016 and 2018 there was a downward trend in outsourcing initiatives requiring investment, but that trend reversed in the third quarter of 2018 according to international legal firm Morgan Lewis, which published an article about Brexit and outsourcing last November.
Could Outsourcing Fill a Post-Brexit Gap?
It’s impossible to predict how Brexit will affect the willingness of UK businesses to outsource, but it could be that in the event of no-deal being struck by the March 2019 implementation date, many EU workers will begin to leave the UK, bringing about a skills shortage.
If that is the case, the use of low-investment, flexible outsourcing, such as that offered by offshore virtual assistants and VA companies that now proliferate in countries such as India and the Philippines, could be a ready-made solution to fill the void, at least in the back office of the smaller UK business.
We’ll continue to keep you updated as trends in UK back-office outsourcing progress, and in the meantime, if your business could benefit from the help of one or more skilled virtual assistants, the team here at Virtual Done Well is ready and waiting to help. Just give us a call in the UK at +44 2 038297035 or contact us online.