1 November 2024 The recent £25 billion increase in employer National Insurance contributions, coupled with a reduction in payment thresholds, is compelling businesses to reassess their strategies regarding pay raises and new hires. 

Adding to the pressure, the National Living Wage is set to rise by 6.7% from April 2025, reaching £12.21 per hour.  This significant increase and upcoming changes to enhance employee rights present employers with challenging decisions.

Exploring Alternatives

In light of these developments, businesses might consider revisiting the 1990s trend of outsourcing non-core activities. Outsourcing can be a viable long-term solution when executed effectively under mutually beneficial service-level agreements. The anticipated 1.2 percentage point increase in employer National Insurance contributions, raising the rate to 15%, could be the catalyst for such discussions. 

Outsourcing functions like accounting, IT services, and HR legal management to specialised firms can increase efficiency, allowing companies to focus on their core competencies. Conversely, keeping these functions in-house may be based on the belief that they are integral to the company’s operations.

Reevaluating Business Beliefs

This juncture presents an opportunity for businesses to reassess their beliefs and mindsets, which are fundamental to success. The International Alliance of Entrepreneurs (IAE) emphasises the importance of these business fundamentals. To stay ahead in this evolving landscape, consider exploring the resources and support the IAE offers.