Post-Autumn Budget 2024: Strategic BPO to Reduce Rising Employment Costs
The UK government’s Autumn Budget 2024 has introduced significant changes to employer National Insurance contributions and the National Living Wage, creating immediate and sustained cost pressure for businesses across sectors. For organisations with large workforces, the combined impact of these changes will be material from April 2025.
ERA Group is working with clients to identify and implement cost offset strategies. Business Process Outsourcing (BPO) is one of the most significant levers available, and one that is frequently underutilised by UK businesses.
The Budget Impact in Numbers
The increase in employer National Insurance from 13.8% to 15%, combined with the reduction in the secondary threshold from £9,100 to £5,000, means that for every employee earning above £5,000, employers will pay more NI from April 2025. For a full-time employee earning £30,000, this represents an additional employer cost of approximately £800 per year. Across a workforce of 100 employees at average earnings, the additional annual cost exceeds £80,000 — before accounting for the minimum wage increase.
How BPO Can Offset These Costs
Business Process Outsourcing transfers defined business functions to an external provider, converting fixed employment costs into variable service costs. For functions where headcount is directly linked to volume — such as finance and accounting, HR administration, customer service, and data processing — BPO can deliver significant cost reductions while maintaining or improving service quality.
ERA Group’s BPO specialists assess client operations to identify functions suitable for outsourcing, benchmark current cost per process against market rates, and structure procurement processes that deliver competitive, contracted savings. Our contingency-based model means that we are paid from the savings we deliver.
Acting Before April 2025
The April 2025 implementation date creates urgency. BPO transitions typically require three to six months of planning and implementation. Organisations that begin the assessment process now are best positioned to have solutions in place before the increased costs take effect.
ERA Group can conduct a rapid assessment of your organisation’s BPO potential within four to six weeks, providing a clear picture of the savings opportunity and a recommended approach to capturing it.
