The process of outsourcing has seen a rise in popularity.

Choosing to outsource IT services could help businesses save money, according to an expert.

Martyn Hart, chairman of the National Outsourcing Association, said that while there have been “winners and losers”, passing non-core activities over to specialist providers is an excellent way of reducing capital expenditure.

He went on to say that one of the benefits is that there are more contracts available, and therefore businesses are able to try and get the best possible deal for their budget.

Mr Hart noted that on the downside though, suppliers – especially those who work closely with the government – are currently being challenged to lower their costs.

Furthermore, the recession has seen many firms look to outsource services, increasing the number of contracts which are being signed and lowering the average value of a deal.

Referring to outsourcing of the payroll, Mr Hart noted: “Outsourcing payroll is even more important for small businesses. Smaller teams and less capital to invest amplifies the impact of the benefits. Time taken to action changes – such [as adding] a new starter or adapting the perpetually-adjusted payroll legislation – are better spent on activities that bring money into the business.”

Recently, Mr Hart spoke to the Guardian about outsourcing IT to overseas providers, noting that because of the recent Open Public Services, white paper government departments will be sending more work overseas.

He added that some of the main things to consider are clauses surrounding data handling and security requirements, and firms would be “foolhardy” to enter into any outsourcing contract without these in place.