Its Quarterly Survey of Small Business in Britain report also shows that SMEs are looking locally when it comes to outsourcing and that the manufacturing sector is leading the way in the recruitment drive.
The report also revealed that a third of firms have been recruiting for the past two years.
Sponsored by the Milton Keynes-based OU, the Association of Chartered Certified Accountants and Barclays Bank,the survey investigates the new jobs being created by Britain’s small and medium-sized firms. It also examines evidence for a growth in outsourcing by SMEs, in the form of contracted out services and agency workers.
Among the report’s key findings was:
• Almost half of those SMEs who recruited new staff had taken on people to undertake core manufacturing or service delivery functions;
• The main reason for recruiting new staff was to replace an employee who had left the business. Significantly, 48% said it was to cope with increased workload, while others were taking on new staff in order to pursue growth strategies;
• Almost four out of five said they have not contracted out services or employed agency workers for any tasks or functions in the last two years;
• Relatively larger SMEs are much more likely to outsource activities and outsourcing is also overwhelmingly local. 82% said their contractors were based in the same city or region.
Report editor Dr Richard Blundel said: “SME owners and managers have some difficult and important choices to make around employment and outsourcing.
“For example, four factors seem to be especially important in deciding to keep activities in-house: the need to maintain managerial control over the activity; quality and reputation; organisational culture and staff commitment; and the need to protect proprietary knowledge.
“There is a very complex mix of factors involved in these decisions and the case is likely to alter over time in response to changing circumstances. However, the scope for outsourcing of certain activities, including many ‘back office’ functions, is likely to increase in the future due to technological innovations such as cloud computing.”
ACCA’s senior economic analyst Manos Schizas welcomed the increase in recruitment among SMEs. “This is evidence of the UK economy slowly rebalancing,” he added.
It was encouraging, he added, that 8% of SMEs took on new finance staff over the last two years. "We have still got a long way to go until businesses have the in-house resources they need.”
Barclays Business managing director Sue Hayes said: ‘This report shows how important SMEs are in creating local employment opportunities. SMEs are a vital ingredient in the future growth of the UK economy.”
