How much can a small business save by outsourcing?

Key takeaways

How much you can save by outsourcing depends on who does the work today. Moving a fully used National Living Wage role offshore saves roughly 25% to 45%. Moving work off an under-used £30,000 employee saves 45% to 60%. Moving admin off owners or senior staff saves 50% or more. Onshore providers may save nothing.

• 25% to 45% saved on a fully used National Living Wage role.
• 45% to 60% saved where an in-house role is 70% used.
• 50% or more saved when admin moves off owners or senior staff.
• Little or no saving from onshore providers on full-time roles.

What decides the size of the saving?

Three things: the loaded cost per productive hour of whoever does the work today, the outsourced rate, and your own oversight time. The first varies most. The same task can cost £16 or £60 an hour in-house depending on who does it and how busy they are.

• In-house vs outsourcing: which model is more cost-effective?

How much do you save on a National Living Wage role?

A fully used employee on the National Living Wage costs about £16.27 per worked hour, and roughly £18–£21 with overheads. Against an offshore rate of £9–£12, the saving is roughly 25% to 45% before management time. At the higher offshore rates, the saving narrows sharply, so compare carefully.

• BPO cost per hour in the UK

How much do you save when a role is under-used?

A £30,000 employee costs about £19.81 per worked hour, but £28.30 per productive hour at 70% utilisation. Against £12–£15 outsourced, that is a saving of about 47% to 58%. Low utilisation, from uneven demand or quiet periods, is the most common source of large savings.

• Staff utilisation rate: the cost of paid idle time

How much do you save by moving admin off senior staff?

A £45,000 manager costs about £29.98 per worked hour; an owner's time is often worth £50 an hour or more. Moving admin at those rates to an outsourced team at £12–£15 saves 50% to 75% or more of the direct cost, and frees time for higher-value work.

• The opportunity cost of doing everything in-house

When does outsourcing save nothing?

When a fully used, low-cost employee is replaced by an onshore provider at £20–£35 per hour, when volumes are tiny, or when the process is undocumented and needs heavy supervision. In those cases, outsourcing may still add cover or skills, but not savings.

• When is in-house cheaper than outsourcing?
• Why outsourcing sometimes fails to save money

What does the saving look like in pounds?

Percentages are easier to act on as annual figures. Using the same 1,400 hours of admin work a year and an outsourced rate of £12–£15 per hour plus oversight:

• From a fully loaded £28,000 hire (about £39,300): save about £16,000–£20,000.
• From 10 hours a week of a £45,000 manager: save about £6,900–£8,300 a year on those hours.
• From a fully used National Living Wage role: save a few thousand pounds, sometimes less.

• In-house vs outsourcing cost calculator: a worked template

What have GBL clients saved?

Across our client work, back-office cost per task has fallen by 42% once the process was written down and run by a managed team, and owners have got 31 hours a week back. Individual results depend on the starting point described above.

• See client work
• BPO Solutions for UK businesses

How quickly do the savings arrive?

Expect the first month to cost more of your time while the team learns. Savings usually show from month two or three, once oversight falls to around an hour a week. Measure against a baseline taken before the switch.

• The outsourcing break-even point: when it pays

Savings estimate checklist

Use these steps to estimate yours.

• Identify who does the work today.
• Calculate their loaded cost per productive hour.
• Get an outsourced rate for the same work.
• Subtract your oversight time.
• Test with pessimistic assumptions.

Next step

Tell us which work you are considering and who does it. We will estimate the saving as a range in a 30-minute call.