British businesses are caught in a perfect storm: soaring energy costs, rising wages, higher national insurance, and an incoming Employment Rights Bill that makes hiring more rigid just as flexibility matters most.
Add geopolitical uncertainty, labour shortages, and higher interest rates, and survival itself starts to feel like success.
Faced with this cumulative burden, businesses are being forced into hard choices.
When the cost of hiring domestically becomes prohibitive, businesses don’t simply absorb the expense indefinitely. They adapt. And increasingly, that adaptation means offshoring.
This rising trend is not confined to global tech giants. Yes, companies like Amazon, Google, and Netflix operate offshore teams across the world.
But so do countless small family firms, boutique consultancies, and mid-sized manufacturers. These are British businesses navigating an increasingly hostile economic landscape shaped by successive policy decisions.
Once remote working became normal during the pandemic, geography stopped being a barrier. If a role can be performed remotely, hiring overseas becomes the rational choice when domestic employment is priced higher by government policy.
South Africa has emerged as a particularly compelling destination for British firms seeking to escape punitive employment costs. The Western Cape alone hosts 60 outsourcing companies employing more than 70,000 people, rising from 2,000 15 years ago.
The financial case is straightforward. South African teams typically cost approximately 50% less than UK equivalents, primarily because the cost of living is substantially lower. When national insurance contributions and other employment taxes are factored in, the gap can widen further.
Beyond pure cost savings, South Africa offers practical advantages that other offshore destinations struggle to match. The time difference is minimal – just one to two hours ahead of the UK – making real-time collaboration simple. Conference calls don’t require anyone to wake up at 3am or stay until midnight. English is widely spoken, eliminating language barriers that complicate relationships with teams in other popular offshore locations.
Cultural alignment strengthens the case further. South African professionals typically share a similar approach to communication and client service as their British counterparts. This reduces the friction that sometimes accompanies international hiring and makes integration into existing teams considerably smoother.
South African universities produce graduates with technical and professional skills comparable to those in the UK, creating a substantial talent pool. Tragically, unemployment sits at approximately 33% – among the highest globally. Talented graduates find themselves competing desperately for limited opportunities.
The nature of offshoring has evolved dramatically. This is no longer limited to call centres or basic administrative support. UK firms are building offshore teams in finance, marketing, legal support, software development, and complex operations. Roles that would traditionally go to British graduates – the very people government employment policies claim to protect – are instead being filled thousands of miles away.
This trend is reflected in my own experience. In the past year, The Legends Agency has tripled its workforce and placed more than 1,000 South African professionals into roles supporting British companies.
But it’s crucial to recognise that businesses don’t make these decisions lightly. Most would prefer to hire locally, to contribute to the British economy and provide opportunities for UK graduates. But when government policy consistently increases the cost of domestic employment through tax hikes and regulatory burdens, firms inevitably seek alternatives.
As pressures on British businesses intensify and government policy continues to increase the cost of employment, more firms will look overseas to remain competitive.
Unless policymakers reckon honestly with these economic realities and recognise that every tax increase has consequences, we risk watching even more opportunities migrate to Cape Town, Durban, and Johannesburg, cities that are increasingly competing with Birmingham, Bristol, and Belfast for Britain’s future.
The government may claim to be protecting British workers. In practice, its policies are pricing them out of jobs that are increasingly going to overseas competitors instead.
