Across the UK, finance directors and managing partners are sitting down with next year’s numbers. For most professional services firms, the biggest single line in that plan is people, and the 2027 hiring budget is where the year’s ambitions either become realistic or quietly fall apart.
This year, that decision deserves more scrutiny than usual. The cost of employing someone in the UK is rising again, employment law changes on 1 January 2027 shift the risk of every new hire, the skills shortage has not gone away, and the economy is forecast to grow by just 1.0% next year.
None of this means firms should stop hiring. It means they should be deliberate about what they are hiring for, and whether a permanent UK role is always the right answer.
This article sets out why 2027 hiring decisions carry more weight than usual, and the five questions every firm should answer before signing off its hiring budget.
Why 2027 hiring decisions carry more weight
Four forces are converging on next year’s hiring budget.
- Employment costs are rising again. The Autumn Budget 2026 confirmed that the National Living Wage and National Minimum Wage will rise by 3.9% from April 2027. Employer National Insurance stays at 15%, with the secondary threshold at £5,000, following the increase in April 2025. Inflation is forecast to peak at 3.8% early in 2027, and median expected pay rises are around 3%, according to the CIPD. Even firms that pay well above the minimum wage will feel pressure to protect differentials across every grade.
- The risk attached to each hire is changing. From 1 January 2027, under the Employment Rights Act 2025, the qualifying period for unfair dismissal falls from two years to six months, and the cap on compensatory awards is removed. In practice, a hire that does not work out could become a tribunal claim within months, with no statutory cap on the compensatory award.
- The labour market is cautious, but skills are still scarce. ONS figures published in October 2026 show vacancies at 691,000, a five-year low, with unemployment at 4.7%. The CIPD describes a “low-hire, low-fire” market, with its net employment balance at +9, close to its lowest level outside the pandemic. Yet 31% of employers still report hard-to-fill vacancies. In accounting specifically, a Global Accounting Talent Index survey of accountants in the UK, US, Canada and Australia found 73% of firms turning away work because of staff shortages, and 71% believe they could grow faster with access to more experienced people.
- Growth is slowing. The Office for Budget Responsibility expects the UK economy to grow by just 1.0% in 2027, down from 1.2% this year, as the energy shock from the Middle East conflict works through.
Put together, those forces mean each permanent UK hire costs more, carries more risk and is harder to find, at a time when demand is less certain. That does not make hiring wrong. It makes hiring by default expensive.
Five things to decide before you sign off your 2027 hiring budget
1. Which work actually needs a UK hire?
Most hiring requests start with a job title. A better starting point is the work itself.
Ask the team requesting a hire to list what the new person would actually spend their week doing, then sort each task into two columns: “needs our expertise” and “needs doing”. Client advice, judgement calls, review and relationship management belong in the first column. Document chasing, data entry, file administration, reconciliations and routine correspondence usually belong in the second.
In most professional services firms, the second column is longer than anyone expects. And if most of a proposed role sits there, the question is not “who should we hire?” but “where should this work sit?”
2. Are you hiring for your peaks or your average?
Professional services work is rarely steady. Accounting firms have January, insolvency practitioners have case surges, law firms win new matters in batches, and letting agents face regulatory deadlines.
Hiring permanent staff for peak demand leaves expensive capacity idle for the rest of the year. Hiring for average demand leaves teams overloaded at exactly the moments that matter most. Neither is ideal.
Before you sign off, map your workload across the year. If the gap between your quietest and busiest months is large, a flexible layer of capacity that scales with demand may be worth more than another permanent role.
3. What does a hire really cost in 2027?
Salary is only the starting point. A realistic cost for each new UK role should include:
- employer National Insurance at 15% above the £5,000 threshold
- employer pension contributions
- recruitment fees or internal recruitment time, often for several months in a tight skills market
- onboarding, training and supervision time from senior staff
- equipment, software licences and office costs
- the productivity gap before a new joiner is fully effective
- the cost of replacing them if they leave
When firms run the full numbers, the gap between the advertised salary and the true annual cost is often substantial. That is the figure to compare against the alternatives.
4. Can you absorb the risk of getting it wrong?
From 1 January 2027, an employee with six months’ service can bring an unfair dismissal claim, and compensatory awards will no longer be capped. That makes probation periods, performance management and early hiring decisions far more consequential.
Firms should ask: if this hire does not work out, how quickly will we know, and do we have the management capacity and processes to handle it properly? For roles that are hard to define, highly variable or new to the firm, it may be wiser to test the need with a flexible model before committing to a permanent hire.
5. Where will your future capability come from?
The final question is strategic. Hiring decisions made in 2027 shape the firm you will have in 2030.
If qualified professionals are scarce, every hour they spend on routine work is a waste of your most valuable resource. If junior roles are changing because of AI, you need a deliberate plan for how people learn and progress. And if local recruitment cannot keep pace with demand, your growth ceiling is set by the job market rather than by your clients.
The firms that plan well will decide which capabilities to build in-house, which to access through partners, and how the two will work together.
Build, outsource or employ globally: a simple decision lens
Once the five questions are answered, most roles fall naturally into one of three models.
| Model | Best suited to | Examples |
|---|---|---|
| Hire in the UK | Work that needs professional judgement, client relationships, regulatory sign-off or partner-track development | Advice, review, client management, business development, supervision |
| Outsource to a BPO partner | Structured, process-driven or high-volume work, especially where demand fluctuates | Bookkeeping, reconciliations, case administration, file progression, compliance tracking, data preparation |
| Employ globally through an Employer of Record | Dedicated specialists who work as part of your team, under your day-to-day direction, without you setting up an overseas entity | Specialist analysts, paralegals, finance professionals, operational support roles |
The point is not to choose one model for the whole firm. It is to match each piece of work to the model that delivers it best. Many of the most resilient firms use all three: a strong UK core, a flexible outsourced layer and selected global specialists.
Where BPO and Employer of Record fit
Outsourcing and Employer of Record models are not a replacement for UK hiring. They are a way to make every UK hire count.
A business process outsourcing partner gives firms trained, managed capacity for structured work, without adding permanent UK headcount, employer National Insurance or employment risk for every additional person. Capacity can grow with demand during busy periods and scale back when things are quieter. Work is delivered to documented processes, with clear reporting, so firms keep full visibility and control.
An Employer of Record model allows firms to bring dedicated international professionals into their team, with the EOR handling the employment relationship, local compliance and payroll in the professional’s home country. The firm directs the work day to day, while avoiding the cost and complexity of setting up an overseas entity.
South Africa is an especially strong fit for UK firms. Its global business services sector grew from 65,000 people in 2019 to 150,000 in 2024. Its professionals work in fluent English, share legal and accounting traditions with the UK, and sit just one to two hours ahead of UK time, so they work the same day as your team.
Used well, both models let firms reserve UK hiring for the roles where it adds most value, and build a structure that can absorb rising costs, regulatory change and uncertain demand.
A perspective from Andrew Portmann
Andrew Portmann, Director at Alpha BPO, believes the most important hiring decision firms make each year is often the one they never consciously make.
“Most hiring budgets are built by rolling forward last year’s structure and adding a few roles. Nobody stops to ask whether the work those roles will do actually needs to be done that way. In 2027, with costs rising and employment risk changing, that default is getting expensive.”
He encourages firms to start with the work, not the job title.
“When we sit down with UK firms, we ask them to list what a new hire would really spend their week on. Almost every time, a large share of it is structured work that doesn’t need someone with their qualifications. Once you see that, the conversation changes. You hire fewer, better people in the UK, and you put the rest of the work somewhere designed to do it well.”
And he is clear that this is about growth, not cutting back.
“The firms that get this right don’t end up smaller. They end up able to say yes to more work, because their best people aren’t stuck doing the things that someone else can do just as well.”
Conclusion
The 2027 hiring budget may be the most consequential one many UK firms have signed off in years. Wage costs are rising, employer National Insurance remains high, the rules on unfair dismissal change on 1 January, skills remain scarce and growth is slow.
In that environment, hiring by default is a risk. The firms that plan well will start with five questions: which work genuinely needs a UK hire, whether they are hiring for peaks or average demand, what each hire really costs, whether they can absorb the risk of getting it wrong, and where their future capability will come from.
Answer those honestly, and a clearer picture usually emerges. A strong UK core focused on judgement and relationships, supported by flexible outsourced capacity and selected global specialists, is more resilient, more scalable and better placed to grow than a structure built on headcount alone.
Before you sign off next year’s numbers, make sure you are budgeting for the firm you want to be, not just the one you were.
Planning your 2027 hiring budget? Talk to Alpha BPO about building flexible capacity through outsourcing or Employer of Record, so every UK hire counts.
Sources
- UK unemployment falls to lowest in a year but vacancies slide further, ITV News, 20 October 2026
- UK labour market stuck in low-hire, low-fire mode as employer confidence stays near historic lows (CIPD Labour Market Outlook, summer 2026), Allwork.Space, August 2026
- CIPD Labour Market Outlook summer 2026, Lewis Silkin
- 73% of firms turn away work due to staff shortages, study finds, Accountancy Today
- Unfair dismissal compensation cap removed from January 2027, DavidsonMorris
- Autumn Budget 2026: key payroll and tax changes for UK employers, Paycheck
- Budget 26: OBR cuts fiscal headroom to £15bn by 2029/30 after Middle East shock, Investment Week
- South Africa: a premier destination for global business services, Invest Africa
- Alpha BPO services
