The Staff Outsourcing Industry in the UK: An Overview

“Strive not to be a success, but rather to be of value.”
– Albert Einstein, Theoretical physicist

Staff Outsourcing has not only become a cost-cutting option for companies. It gives them access to workers with specialized skills from across regions, allowing them to focus on their core business. In the UK, the Staff Outsourcing industry is quietly booming. Small, medium, and large UK companies are hiring more remote staff members for standard business functions such as payroll and IT customer desks. Notably, many UK businesses that outsource are less impacted by the productivity gap and high unemployment rate hounding the economy.

In this article, we’ll share key stats driving the Staff Outsourcing industry in the United Kingdom (UK). We’ll also review the global Staff Outsourcing industry and share significant data from the two highest outsourced services, the IT outsourcing and BPO industries. 

What is Staff Outsourcing?

Staff Outsourcing is a practice where services are hired out to third-party service providers while business process outsourcing or BPO is where entire business functions are outsourced to another company (ie. marketing or human resources). In the fact sheet below we share key data on the global outsourcing market.

Global Staff Outsourcing at a glance 

• IT services make up 72% of all global Staff Outsourcing contract values. (ISG)
• 90% of companies consider cloud computing as a key enabler in Staff Outsourcing.
• India, Poland, and Mexico are the top 3 locations with the largest Shared Service Centers (SSCs).
• Finance (91%), Human Resources (62%), IT (57%), and Procurement (48%) lead the functions primarily performed by global business services in 2023.
• Top processes in the top 3 functions include accounts payable, payroll, IT service desk, PO creation, and change processing. (Deloitte)
• Automation has remained the most desirable digital enabler for GBS organizations.
• Cost reduction (83%) and standardization & efficiency of processes (82%) are the top 2 priorities for global business services in 2023. (Deloitte)
• Top BPO revenue is generated in the US with $146.30 billion in 2024. (Statista)

   

High costs in the UK

According to a report by IBISWorld in the UK alone, there are 155,564 BPO service businesses as of 2023, a 2.5% increase from 2022. The IT and BPO contract values increased in Europe, the Middle East, and Africa in the 2nd quarter of 2023 to $4.5 billion. In the UK, it was up 50% year-on-year. For European and UK companies, cost optimization was a priority in response to high inflation and energy costs.

The UK is recovering from a recession. In recent times, its economy suffered from two-quarters of negative growth in 2023. The British public was beset by high unemployment and inflation rates. Wages have stagnated, and a widening productivity gap caused by underinvestment, inadequate diffusion, and an absence of joined-up policy-making was to blame. UK households have seen a high cost of living even as the inflation rate is expected to decline by 2.2% in 2024.

The primary drivers of Staff Outsourcing have mainly been cost reduction, access to highly skilled workers, and an increased focus on core business functions which answers some problems the country faces. As a result, the UK has seen more and more UK businesses looking to outsource.

UK Staff Outsourcing Stats

• In the UK, 48% of companies outsource a business function.
• In 2019, 70% of UK B2B companies outsource business operations. (YouGov)
• In 2019, around 3.3 million workers in the UK were outsourced. (Cybercrew)
• Outsourced workers in 2019 were primarily employees of Sodexo, Axis, Serco, Capita, and Interserve.
• In 2025, BPO revenue is estimated to reach £21.8 billion, with an estimated growth rate of 6.21%.
• By 2025, Capgemini UK plc, IBM United Kingdom Ltd, and Capita plc are estimated to be the biggest companies by market share in the BPO services industry in the UK. (IBISWorld).
• UK businesses outsource IT and accounting services because they don’t have qualified in-house staff. (YouGov)
• UK businesses who outsource payroll experts believe it’s a more efficient option. (YouGov)
• Most UK BPO businesses focus on their local market, servicing the British English-speaking population. (IBISWorld)
• Local BPO providers in the UK specialize in providing services to the financial service industry (banking, insurance, investment management). (Statista) 
• UK businesses are turning to Staff Outsourcing to reduce costs and improve their operational efficiency. (Statista)
• UK BPOs offer a range of services including HR, customer support, finance, and accounting.
• Among the top local BPO companies in the UK include MCI, Face for Business, Verbatim, The Contact Company, and Arise. (OutsourceAccelerator)
• The UK government is supportive of the Staff Outsourcing industry, providing tax incentives and other benefits to BPO providers to encourage growth.
• The UK government is one of the main users of Staff Outsourcing services in market primarily for IT and BPO functions. (Lexology)
• Large businesses are more likely to hire services in IT and recruitment while SMEs are more likely to hire suppliers related to accounting and finances. (YouGov)

Conclusion

UK businesses primarily outsource their staff to save money and for efficiency, which are the same economic drivers in Staff Outsourcing for most developed countries such as the US. The UK remains a leader in the Staff Outsourcing industry owing to its highly skilled workforce, its focus on digital transformations, and cost-competitiveness on wages. It is expected to grow year-on-year in line with positive GDP growth by the country in the first quarter of 2024. 

BPO Ninja is your source for up-to-date information on Staff Outsourcing in the Philippines. Whether you are a small or medium UK business seeking new team members, BPO Ninja can help you build your own remote team. Reach out to a member of our staff for further assistance through our contact form.