Trend Towards Outsourcing Back Office Functions Likely To Continue Into 2025
As we highlighted in a recent article, a survey conducted by Parseq / Censuswide found that 1.3 million businesses are planning to outsource their back-office functions (e.g HR, IT, accounts, finance, and data management) by 2027, with the trend towards outsourcing greatest amongst large companies (71%) compared with small and medium-sized enterprises (24%).
New Research
Now, new research conducted by Parseq has found that the trend towards outsourcing back office functions is likely to accelerate in 2025, with 57% of businesses planning to increase the rate at which they will be outsourcing these functions.
The back office functions that are likely to see the biggest increases in the level of outsourcing according to the survey are accounts and finance, and the main reason for outcourcing is to acquire expertise (32%). Reducing overheads was cited by 23% of the respondents
Comment
Commenting upon the findings, the CEO at Parseq, Craig Naylor-Smith, stated: "Outsourcing is on the up, driven by talent and cost challenges, and growing recognition that businesses can realise efficiencies of scale and automation through partners that already have that expertise and a critical mass of people and technology. Organisations are outsourcing back-office functions to access specialist skills, cut costs and focus on their core competencies. This is a long-term trend that wage inflation and increases in national insurance contributions will only accelerate."
23% of Workers Planning A Job Change In The Near Future
Research conducted by Culture Amp has found that 23% of workers plan to change job in the near future (up 3% from the previous year), with another 13% planning to ultimately leave long term (up 1% compared with the previous year).
In terms of western economies, only Germany has a higher rate of staff attrition (24%) compared to the UK (23%). The figure for the United States is 19%.
One of the key elements in terms of staff retention rates is good management / leadership quality according to the survey. Retention rates amongst those businesses perceived to have good managers / leadership was 94%, compared to just 19% where management / leadership was said to be of poor quality. However, where the business lacks a good manager, but retains good leadership, the drop off in the staff retention rate is less severe - 35%
Commenting upon the findings, the Vice President and General Manager EMEA at Culture Amp, Nick Matthews, stated: "As Europe faces ongoing political, economic, and social/workplace uncertainties in 2025, organisations must prioritise their strategic workforce management in this unpredictable post-pandemic landscape. The critical challenge remains employee retention, which directly impacts organisational performance. Our research challenges the traditional notion that employees simply leave bad managers. It’s imperative that organisations leverage their leadership layer in conjunction with their front line managers to ensure that they have a coherent and strategic focus on employee experience as they navigate 2025’s challenges."
Most Workers Not Expecting A Christmas Bonus
Research conducted by Zest has found that 60% of workers are not expecting to receive a Christmas bonus this year, with 44% not expecting to receive a pay rise in 2025.
The main reason cited was the increase in national insurance in the Autumn Budget. Since the Autumn Budget, the economic news has only got worse with inflation (as measured by the Consumer Prices Index (CPI)) rising to 2.6% (up 0.9% from 1.7% just 2 months ago), and GDP contracting by 0.1% for the second month in a row, with fears of a recession looming. Consequently, the Bank of England have have kept interest rates at 4.75%, and downgraded their growth forecasts
Commenting upon the situation in relation to Christmas bonuses, the CEO at Zest, Matt Russell, stated: "After yet another tough year, many employees appear resigned to not receiving the financial rewards they’re looking for from their employer. If pay stagnates or organisations are unable to offer bonuses, they must ensure they are finding alternative ways to reward employees or they risk falling behind competitors. Employee benefits packages offer a cost-effective approach for employers to reward employees without salary hikes and ensure they continue to attract and retain key talent."
