Good ol' outsourcing will come in handy again
If you want an example of the challenges posed by IR35, just take a look at Crossrail. The well-publicised delays to London’s ambitious engineering project have been caused – at least in part – by the HMRC regulation making it harder to retain skilled contractors. And it isn’t the only public sector project to have suffered.
Now, private sector companies are also beginning to wonder about the implications of having to move their contractors to Pay As You Earn (PAYE).
Will these companies still be able to attract and retain the best talent? And will they still be able to afford that talent as contractors increase their rates to offset their lost income?
It might be that extended teams based overseas are their best bet of offsetting these concerns and remaining competitive. Just like UK companies rushed to outsource their IT and software engineering projects to Asia a decade ago in an urge to save costs and reduce OPEX, they can now get back to using this practice in an urge to overcome IR35. However, as many things have changed over the past decades, so has outsourcing. Now, UK companies can rely on local tech consultancies with a solid footprint in the offshore/nearshore markets and piggyback on their infrasctructure and R&D team capabilities, untapped talent pools and external expertise to build highly-efficient extended software teams and leverage offshore markets like Ukraine without having to invent kludges to avoid IR35 burden within the UK.
As a Midlands consultancy with an off-site development centre in Kyiv, we've started seeing more incoming requests from local British companies that don't want to pay through the nose and are looking to extend their in-house teams to Ukraine to escape IR35 regulations.
Biting the hand that feeds IT
