Offshoring and Small Businesses

An interesting piece of market research has landed on my desk today from ICM which reports on a survey of small businesses in the UK during November 2009. It looks at whether SME’s are already getting involved with, or are contemplating, offshoring (a new part of BUSS3)

The results of the survey are generally very positive for offshoring.

Almost one quarter (22 percent) of UK SMEs are considering offshoring, while one in ten are very likely to offshore elements of their businesses in 2010.

The report, entitled ‘The SME Offshoring Readiness Index’ also found that 20 percent of businesses had increased their interest in offshoring as a direct result of the recession. Recession aside, the biggest driver behind UK SMEs’ interest in offshoring was the current cost of UK labour with 28 percent indicating this was an issue. 13 percent also said they would use offshoring due to a lack of available UK skills.

The survey also found that some SMEs would use offshoring to focus on core competences (16 percent) and to extend service hours (14 percent). These positive signs were backed up in that 22 percent would also look at offshoring to expand and strengthen their UK businesses.

When asked what they would be most likely to offshore, SMEs indicated the following processes:

IT development/ maintenance; 24%
Data processing 20%
Customer services 18%
Other back office processes 16%
Finance and accounting 15%

It certainly ties in with what we’ve been doing here. tutor2u has offshored IT development and maintenance (to Canada) since early 2008, and the management of our web-server cluster to the US since 2005.

We’ve also offshored part of our call-handling to another country - Wales