How to build a business case for outsourcing

Key takeaways

A business case for outsourcing compares the full cost of doing a process in-house with the full cost of a managed team, then adds the value of freed hours and faster replies, and sets out the risks and how they will be managed. Keep it to one page with a 12-month view.

• £16.27 per worked hour is the in-house floor for a UK employee on the minimum wage.
• Count freed senior hours at their real value, not at an admin rate.
• Include setup effort: 2 to 4 hours a week of internal time for the first 3 months.
• Show the exit: short notice terms and who owns the documented process.

What goes into a business case for outsourcing?

A business case for outsourcing has five parts: the problem in numbers, the options considered, the costs of each, the benefits in hours, revenue and risk, and the plan with success measures. Decision-makers want to see that you compared hiring and doing nothing, not just outsourcing.

• Problem: hours, reply times, backlog and errors today.
• Options: do nothing, hire, outsource, or a hybrid.
• Costs: 12-month total for each option, including setup and management time.
• Benefits: hours freed, revenue protected, cost per task.
• Plan: pilot scope, owner, measures and exit terms.

• When should a UK business consider outsourcing?

How do you cost the in-house option?

Use the fully loaded cost, not the salary. At 2026/27 rates, a full-time employee on the National Living Wage of £12.71 costs about £28,309 a year with employer National Insurance at 15% above £5,000 and a 3% pension, or about £16.27 per worked hour after holiday. Add recruitment, equipment, software, space and management time.

If the work is currently done by the owner or skilled staff, cost their time at what it is worth to the business. That is often the biggest number in the case.

• The true cost of an employee in the UK
• What is your time worth as a business owner?

How do you cost the outsourced option?

Take the provider's hourly or monthly price, multiply by the hours needed, and add setup fees, tool licences and your internal owner's time. As an indicative market range, managed offshore teams cost £9–£18 per hour and onshore teams £20–£35. A 30-hour-a-week offshore seat at £12 per hour is about £18,700 a year.

Check the contract terms too. A low rate with a 12-month minimum carries more risk than a slightly higher rate on 30-day terms.

• BPO cost per hour in the UK
• The hidden costs of outsourcing

How do you value the benefits?

Value three benefits: hours freed, revenue protected and cost saved. Hours freed are worth what those people will do instead. Revenue protected comes from faster replies and fewer missed enquiries. Cost saved is the difference in cost per task. Be conservative and show your working.

• Hours freed x the value of the work they return to.
• Enquiries recovered x conversion rate x average order value.
• Cost per task in-house minus cost per task outsourced, x annual volume.

• Work out the ROI of outsourcing

Which risks should the business case address?

Address the risks a sceptical reader will raise: quality, data protection, staff reaction and lock-in. For each, state the control. Quality is managed through a written process, a scorecard and weekly reviews. Data protection is managed through a processor contract. Lock-in is managed through short notice terms and owning the documentation.

If existing staff move roles or leave because of the change, check whether TUPE applies before you finalise the plan.

• The disadvantages of BPO and how to manage them
• TUPE and outsourcing

What does a one-page business case look like?

A one-page case fits on a single side with a table of options and a short recommendation. Decision-makers read the recommendation and the 12-month numbers first, so put them at the top. Everything else supports those two lines.

• Recommendation: one sentence, such as pilot outsourced inbox handling for 12 weeks.
• Problem: three numbers, such as 14 hours a week, 26-hour replies, no weekend cover.
• Options table: do nothing, hire, outsource, hybrid, with 12-month cost and main risk.
• Benefits: hours returned, enquiries recovered and cost per task.
• Plan: start date, owner, measures, review points and exit terms.

• Outsourcing vs a part-time hire
• The cost of not outsourcing

When is a business case overkill?

For a single part-time seat on 30-day terms, a one-page note is enough. The heavier format is for decisions involving several processes, existing staff, long contracts or a board. Spending a month on a business case for a £1,500-a-month pilot costs more than the pilot.

What does this look like in practice?

A pattern we see in UK logistics SMEs: the operations director needs board approval to outsource proof-of-delivery chasing and customer emails. The case that gets approved shows three options, a 12-month cost for each, the hours returned to the transport planners, and a 12-week pilot with a clear stop rule.

• See client work
• BPO Solutions for UK businesses

Business case checklist

Include each of these on the page.

• The problem in numbers from the last 12 weeks.
• Four options: do nothing, hire, outsource, hybrid.
• A 12-month fully loaded cost for each.
• Benefits in hours, revenue and cost per task.
• Risks with a named control for each.
• A pilot scope, owner, measures and exit terms.

Next step

Send us the process and your rough numbers. We will help you build the cost side of the case with real market ranges so it stands up to questions.