As of April 2023, the national living wage in the UK increased to £10.42 per hour, representing a 9.7% increase from 2022.
Whilst this may seem like a positive step forward, the elevated wages make it increasingly difficult for companies to stay competitive in the market. This is especially true for small businesses in specific industries that traditionally operate on tighter budgets and are more likely to pay employees minimum wage.
As a business owner, outsourcing could now be an attractive option.
Using the outsourcing services of a BPO for your business functions may offer a way to reduce costs while still providing quality services.
Outsourcing is the process of contracting parts of your business operations to a third-party firm, such as a Business Process Outsourcing (BPO) provider.
Examples of the types of outsourcing services include;
The outsourcing company is responsible for the function being carried out, including all overhead costs.
One of the main benefits of using a business process outsourcing company for some of your functions is the huge cost savings in labour. With minimum wage increases, outsourcing can help businesses mitigate the impact of these costs.
Using an outsourced service for business processes such as sales and customer service can help lower labor costs. When using offshore outsourcing, the savings can be as much 60% in comparison to UK counterparts.
Some industries require seasonal, minimum wage labour, such as retail or travel. With the increase in the minimum wage, some businesses may now find it cost prohibitive to hire seasonal workers or run certain operations with a full staff.
Outsourcing some of your business processes to third-party providers can provide scalability and flexibility as those firms can quickly scale up or down services when needed, meaning businesses can operate on an as-needed basis.
This helps your business stay lean for as long as possible, whilst providing scale to meet peak demand where necessary.
Outsourcing business processes can help firms reduce risk by allowing a service provider to handle processes that provide risk associated with labour laws, compliance, and other factors.
This frees up valuable financial resources associated with managing those processes and allows businesses to focus on core operations.
While outsourcing can bring many benefits, businesses should follow best practices to ensure a successful outsourcing partnership.
Here are some best practices that businesses can follow when using a business process outsourcing firm:
Choosing the right outsourcing partner is essential for any business.
To ensure that you are partnered with an experienced and reliable provider, be sure to conduct your due diligence in researching their expertise, track record, references, and reputation.
With this knowledge at hand, businesses can then confidently select a qualified outsourcing partner who meets all of their unique requirements.
To see the benefits of outsourcing to Consumer Links, read our case studies.
Having a transparent communication method is integral for any successful outsourced partnership.
Your business should clearly articulate expectations to your outsourcing partner, including the project’s timeline, objectives and deliverables.
This will eliminate any miscommunications or discrepancies that could arise between both parties later on and ensure everyone is up-to-date with one another’s progress.
As mentioned above, communication is key to a successful outsourcing partnership.
Businesses should establish regular communication channels with their outsourcing partner, such as weekly or monthly check-ins.
This can help keep both parties informed of a project’s progress and any issues that arise.
Outsourcing business processes can be an invaluable tool for any business looking to manage costs associated with the National Living Wage increase for in-house employees.
A further increase has been announced for 2024, putting the squeeze on businesses already working with tight margins. And with even tighter margins, it can be harder to obtain a competitive advantage in your industry.
One of the many benefits of outsourcing is that it can help you increase or maintain your profit margins, helping you to stay competitive and profitable in the long term.
In addition, it can help keep your business lean by providing scalability and flexibility on demand, whilst reducing associated risks that provide more costs to monitor such as compliance.
With the right outsourcing partner, UK businesses can be sure they are well-positioned to weather the storm of increased labour costs while staying ahead of their competition.
At Consumer Links, we understand how important it is for UK businesses to stay competitive and cost-effective in today’s economy.
That’s why our experienced team will help you reap the benefits of outsourcing, from reduced labour costs to increased efficiency.
We will work with you every step of the way. From initial assessment to implementation, we ensure that you get the best possible performance from your outsourcing contracts with us.
For more information about how we can help your business cope with the National Living Wage increase, get in touch today.
See how other recruitment busineses have utilised our outsourcing services in our case studies.
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