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SMEs are outsourcing closer to home

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The Q2 Survey of Small Business in Britain provides encouraging evidence on recent employment trends. Dr Richard Blundel from The Open University Business School states that despite continuing concerns over the state of the UK economy, “the findings suggest many SMEs have been actively recruiting new staff. More than half of respondents report that they have taken on at least one new member of staff in this period.”

The report, sponsored by The Open University, the Association of Chartered Certified Accountants (ACCA) and Barclays Bank, investigated the new jobs being created by Britain’s small and medium-sized enterprises (SMEs). Almost one third of the firms surveyed had taken on several new people since 2011. 

Almost half of SMEs who recruited new staff had taken on people to undertake core manufacturing or service delivery functions. The next most commonly-reported functions in recruitment terms were marketing and customer services, accounting, and financial management.

The main reason for recruiting new staff, however, was to replace an employee who had left the business, but 48 per cent of online respondents said it was to cope with increased workload. Others took on new staff in order to pursue growth strategies.

But what about outsourcing? It is still quite rare among SMEs, with 79 per cent of respondents reporting that they have not contracted out services or employed agency workers for any tasks or functions in the last two years. Relatively larger SMEs, however, are more likely to outsource activities. For example, only 14 per cent of firms in the smallest size band (less than £100,000 turnover) had engaged in outsourcing as compared to 33 per cent in the largest size band (£5m +).

Outsourcing by SMEs is also overwhelmingly local, with 82 per cent reporting that contractors were based in the same city or region, 21 per cent in another part of the UK and only five per cent identifying contractors based outside the UK.

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