Black Thrive and JRF launch a new project on outsourcing and ethnicity in the UK.

Authors: Morgan Bestwick and Celestin Okoroji

Do all the people who work in your organisation, work for your organisation? No matter what industry you work in, the answer is probably no. At least some workers in your organisation are likely to be paid by someone else. They are ‘outsourced’ workers. It’s likely that a huge range of people are working in outsourced roles, from cleaners, cooks and security guards, to programmers, HR managers and finance professionals. But is that a good thing? And are some people more likely to work in an outsourced role than others?

To investigate these issues, at the start of this year, Black Thrive and JRF launched a project looking at outsourced work — and in particular, its relationship with race and ethnicity in the UK. Both our organisations share an interest in employment, in-work poverty, and the relationships between race, ethnicity and job quality in the UK economy.

What do we mean by ‘outsourced work’?

Since starting the project we’ve realised that clearly communicating what outsourcing is — and the different situations it happens in — can be complex. We think this is why there’s so little quantitative evidence around it (more on that later). What makes things tricky is that outsourced work is less about the type of work being done, and more about the relationship between the firm you’re employed by and other firms. Labour market research often looks at the issues facing workers through lenses which outsourcing cuts right across — like contract type or employment status — but we know that outsourced workers can:

• Have a range of contract types — fixed term, short term, zero hours.
• Have any employment status — they could be workers, employees or self-employed.
• Work at a range of pay levels and be high or low paid.
• Be in any sector, though some jobs, like cleaning, may be more likely to be outsourced.
• Be agency workers — or not.

We’re interested in ‘outsourced’ work in the way that the OECD talks about it — when you’re ‘legally employed by one firm but in practice work for another’ and typically where a ‘lead firm has a continuing need for primarily labour services provided by the contractor firm, and the lead firm exerts significant supervision or control without being the legal employer’ (OECD, 2021). And we want to better understand the range of different contexts that ‘outsourcing’ happens in, and how this affects workers’ experiences of work.

What have we done so far?

None of the traditional surveys used for economic and social research ask about outsourcing, as far as we can tell; instead, we’ve looked at the existing evidence on the scale of outsourcing which comes from unofficial datasets. A 2015 Oxford Economics analysis for the Business Services Association suggested around 1 in 10 workers could be outsourced within the ‘business services’ sector, while polling from the TUC in 2022 suggested outsourced workers could number more than one in three. This variation suggests a significant gap — or lack of clarity — in the data we currently have.

Despite this data gap, we know there’s existing knowledge and work in this area. Our systematic literature review, focused on how many workers in the UK are outsourced, whether this varies by industry or demographics, and how workers feel about outsourcing, found little in the way of peer-reviewed literature on domestic outsourced work. A majority of the academic literature was concerned with ‘offshoring’ outside of the UK. We did find some interesting, but a limited number of, insights in the academic literature, especially in relation to the experiences of trade unions opposing outsourcing ( Guillaume and Kirton, 2020; Kirton and Guillaume, 2019), and evidence on the complexity of outsourcing relationships which are often complex and involve multiple layers of sub-contracting.

We’ve also been speaking to key stakeholders and reviewing existing campaigning, research and policy work from organisations including the Equality and Human Rights Commission, Trades Union Congress, International Workers of Great Britain (IWGB), Latin American Women’s Rights Service and Focus on Labour Exploitation (FLEX). Trade unions like the IWGB and the PCS have drawn a connection between outsourcing workers on worse terms and conditions and institutional racism, while research from organisations like FLEX highlights the over-representation of workers from ethnic minority groups in often-outsourced occupations like cleaning. Several legal cases highlight similar concerns. In 2021, outsourced workers from United Voices of the World union won an employment tribunal case against Royal Parks for ‘indirect racial discrimination’.

Our conversations with stakeholders have also helped shape our next steps — affirming the ‘anecdotal’ link between ethnicity and low-paid outsourcing and confirming it as one that needs further exploration; highlighting the complexity that workers can face in understanding who their employer is in outsourced contexts; and sharing where current protections like ‘TUPE’ might be failing to adequately protect workers. Yet despite all the existing policy, research, and campaigning work on this issue, we still don’t know exactly how many people are in outsourced jobs across our economy — or who they are.

What we want to do next

Our initial research and conversations reveal just how important it is to get a handle on the scale of outsourcing in the UK and on the extent to which ethnic minorities are more likely to be in outsourced roles — to better understand what’s going on in the labour market, and the potential implications for workers. So, our next step is to commission a nationally representative survey, with the aim of creating more detailed data on the scale and composition of the outsourced workforce in the UK, and the experiences of outsourced workers. This will involve speaking to outsourced workers to better understand how people describe their own jobs and employment relationships, to help inform the questions we ask. Through this survey, we want to develop the evidence base around low-paid outsourcing — and be able to better define when outsourcing does or doesn’t work well for workers.

We want to make sure that this work helps policy makers, campaigners, unions, employers and workers get a better sense of the scale and mix of the outsourced worker population. We also want to provide useful insight for those seeking to improve outsourced work and reduce labour market inequalities in the UK.

We’ll be sharing our thoughts around this work as we go. And once we’ve published a report detailing our findings, we’ll also release the raw data from our survey online, for anyone else keen to run analysis.

Please get in touch

We’d like to thank everyone who’s spoken to us about outsourced working so far — helping us to gather perspectives from stakeholders including unions, academics, legal experts and business service providers. This is an exploratory project, where we’re working out what’s most important as we go along. We’re really keen to hear from people and organisations already working on or experiencing these issues as we develop this project. What might we be missing when thinking about these issues? Do you have suggestions for how we approach the survey? Are you an outsourced worker keen to share your thoughts? We’d really welcome your views. If you’d like to get in touch, please email: morgan.bestwick@jrf.org.uk and celestin.okoroji@blackthrive.org

References

Guillaume, C Kirton, G (2020) Challenges and pitfalls for workplace unionism in a restructured public service. Economic and Industrial Democracy, 41(1), 212–228. Available: https://doi.org/10.1177/0143831X17697377 [Accessed: 3 April 2023].

Kirton, G Guillaume, C (2019) When welfare professionals encounter restructuring and privatization: The inside story of the probation service of england and wales. In Work, Employment and Society (Vol. 33, Issue 6, pp. 929–947). Available: https://doi.org/10.1177/0950017019855229 [Accessed: 3 April 2023].

OECD (2021) 4. ‘The rise of domestic outsourcing and its implications for low-pay occupations’ Available: https://www.oecd-ilibrary.org/sites/937ad5bc-en/index.html?itemId=/content/component/937ad5bc-en [Accessed: 3 April 2023].