Outsourcing – the Answer to Labor Market Issues in The UK’s IT Industry
An employee worth his weight in gold
As many as 75% percent of the nearly 60,000 IT companies in the UK are located outside London. Not surprisingly, both salaries and costs are highest in the capital – smaller companies must therefore look for cheaper alternatives. Yet London is one of the most attractive places for employees, in terms of both earnings and prestige, as well as the presence of international companies whose headquarters are based there. It is the outflow of the most talented IT professionals to the largest players in the IT market which is the main concern of local businesses, which cannot compete in the race to attract employees.
Recent years have seen an explosion not only in the wages of IT specialists, but also in the range and value of perks offered by desperate employers. Cars, gym memberships, healthcare, pension schemes, nurseries, attractive training courses – these are just some of the extra benefits offered to tempt specialists to join. Major corporations compete directly with one another in inventing ever more extravagant incentives, from health insurance for cats and dogs, to massages, and everything in between.
Costs just keep growing
Even if a company provides its employees with all of these benefits, as well as a fully-furnished office with a climbing wall and space for afternoon naps, the costs don’t stop there. The recruitment process is getting longer and requires ever more creative activities. Regardless of whether you hire an outside recruitment firm or whether recruiting stays in-house, the cost of actually getting the employee will be many times his or her monthly salary. At the same time, there is no way to be sure that the employee will not leave after a mere few months, tempted by a seemingly better proposition.
Of course, the largest single expense in the context of employment remains the salary itself. The exact amount naturally depends on the location, as I mentioned earlier, but salaries in the IT industry are much higher than the average, irrespective of whereabouts. In the largest cities in the UK, the average annual salaries as cited in job offers range from £36,000 in Belfast to nearly £59,000 in London. It is also worth remembering that the final figure, as negotiated by the employee, may be even higher. But that’s not all – because according to cost calculator estimates, after adding the cost of taxes, equipment, training, licensing, and leave of absence, it turns out that the full cost of an employee in London may even exceed £97,000 per year. Or about £47 per hour!
Even higher sums are associated with the hiring of contract workers, whose wages don’t contain so many hidden costs, but nonetheless are much higher than workers employed on a standard employment contract – and may be as high as £120,000 a year.
Not all programmers are created equal
With such high demand for IT specialists nowadays, companies are often forced to compromise, resulting in the hiring of workers who subsequently fail to meet expectations. This situation unfortunately also spoils the labor market, as large numbers of employees have low skill levels and minimal motivation to do anything about it because work will come to them. One such programmer working in the UK, who has extensive experience working on international IT projects, honestly lays out for us the cons of hiring this kind of worker:
- lack of basic programming skills,
- superficial knowledge of programming languages,
- lack of independence and problem-solving skills,
- low productivity, and the creation of low-quality software,
- lack of documented experience in that worker’s CV,
- excessively high expectations in relation to skill level.
Unfortunately, employers often assume that they simply have no alternative, due to the difficult situation on the labor market. So they agree to the lesser of two evils, which unfortunately affects the quality of the services they offer, or the applied IT infrastructure. Instead of investing in new technologies and moving with the times, they waste ever more money on old solutions, which consequently leads to technological debt.
Outsourcing – the scalability of resources
And now we get to the point. In the current heyday of cloud services that allow you to customize resources to suit the needs and capabilities of the company, outsourcing IT services and hiring employees from external service providers is truly a sign of the times. Outsourcing allows you to choose the best specialists in the field, without burdening the company with all the costs of hiring the employee full-time. It provides great opportunities in terms of scalability: highly qualified staff with experience in various projects in many countries are available within a short period of time, for a reasonable price. For example, in terms of Polish IT specialists, acclaimed by HackerRank as some of the best in the world, if we take into account the actual costs of employment and the hourly rate, the wage of a programmer may be only half as much as in London. Moreover, all obligations in terms of hiring workers which may be borne by the employer, are now the responsibility of the outsourcing services provider, and workers are hired for a predetermined period equivalent to the duration of the project. After completion, their employment may be extended for additional maintenance services, or they are simply transferred to another project, or to another customer.
Most importantly, it is the outsourcing company which is responsible for the quality of services provided, and which must satisfy its obligations according to the contract which regulates all aspects of co-operation, from the project deadline, to the budget, and finally to objective indicators of the quality of the services provided.
Such a model of cooperation may, however, benefit all parties – the customer may utilize the service itself, the service provider earns remuneration, and employees get secure and attractive employment, as well as the opportunity to work on interesting and diverse projects.
Poland – the most attractive European country for outsourcing
Year after year Poland is named the best location for outsourcing! In 2015 KPMG provided a report that showed Poland on the first place in Europe. In 2016 position is sustained what shows A.T. Kearney report.
A.T. Kearney a leading global management consulting firm and trusted advisors to the world’s foremost organizations, published a 2016 Global Services Location Index where Poland is indicated as the best European country for outsourcing.
The 55 countries in the 2016 Global Services Location Index were selected on the basis of corporate input, current remote services activity, and government initiatives to promote the sector. They were evaluated against 38 measurements across three major categories: financial attractiveness, people skills and availability, and business environment.
Poland is on the first place in Europe and ten in the World. Many of the largest offshoring operations are based in Polish cities – Warsaw, Kraków, Wroclaw, Katowice, and Lodz. The presence of multiple canters for the industry gives Poland a considerable edge over smaller competitors in Central and Eastern Europe. Without a doubts through advantages of Poland we can mention: cultural similarities, high education level, tax incentives, stable economic situation, and very good language skills.
A.T.Kearney report – 2016 Global Services Location Index
IT Managed Services – Effective Operation of the Maintenance Process of IT Systems
What are Managed Services?
The Managed Services model is already used in many industries, including HR, manufacturing and IT, and is becoming one of the most important and fastest-growing segments of services. Another important issue here is security – often an external, specialized company can provide not only the appropriate conditions for achieving better results, but can also better ensure the security of access to data.
Due to growing interest from managers in this model of cooperation, the topic is becoming increasingly popular on European market. Based on the experience which I have gained at JCommerce, I would therefore like to introduce readers to the concept of Managed Services.
Managed Services as support for IT governance within a company
The Managed Services model has a wide range of potential applications. The simplest indicator of the moment at which it is worth considering the introduction of Managed Services is the implementation phase of the new system. After building the IT infrastructure and the commencement of system operations, it is necessary to conduct maintenance on the new system. It is precisely at this point that Managed Services start to be used, the aim of which is to take care of the area indicated by the customer, e.g. to ensure the continuity of the company’s ERP system or to ensure the smooth functioning of business intelligence systems.
Managed Services, in terms of support for business, cover a wide range of services and can encompass every part of the company’s IT system. The main tasks are to manage and maintain servers, infrastructure, applications (ERP, CRM), and data processing systems and to cover the crucial area of daily management of technical support services. In addition, the range of services can be extended to the Help Desk and Service Desk. Additionally, the variants of service provision by the service provider, offered by the market, are also beneficial to the customer. Support services can be carried out on the customer’s own technological background or in the form of a model in which the supplier is fully responsible for the supply and maintenance of solutions, as well as for providing the environment and infrastructure.
Why are Managed Services worthwhile?
As I previously mentioned, the range of services is very wide, but it is worth mentioning the benefits to the customer. It is worth looking at them through the prism of the challenges facing today’s IT departments in Europe. As indicated by the C-Level report “Managed Services – A new trend on the outsourcing services market”, increased operational efficiency, optimizing IT processes, reducing operating costs of IT infrastructure, access to new technologies and skills, and higher service levels are all still among the most important IT department tasks. This goes to confirm the apparent trend for many companies to move away from the physical ownership and management of their resources, towards the transition to using an external partner to maintain the environment or IT system, either in part or in its entirety. Such decisions in particular are facilitated by the growing popularity and understanding of cloud services – where the issue of physical possession does not arise, and the technology is fully prepared to manage applications in a secure and efficient manner from any location.
Regardless of the area of IT, or the degree to which the company decides to embrace Managed Services and what type they choose, we can identify some common benefits for companies which opt for this solution.
Again, I will refer to the experience of JCommerce, which offers support to its clients through the management of various IT platforms. Using the Qlik application (which is a Business Intelligence tool supporting reports and analysis) as an example, we can illustrate the complexity of the operation and maintenance in the smooth operation of the given IT solution. How? Well, Qlik gives users the ability to scale and to create a wide variety of reports for all the company’s departments and facilitates the customization of the tool to the individual needs of users. Any large-scale expansion of the functionality of the Qlik platform therefore requires constant monitoring and development. By opting for Managed Services supporting this type of application, we can gain the following benefits:
- Increased efficiency of the system, applications, and the IT department itself, which has the possibility of concentration, e.g. on the development of innovation in the company, or better support for the launch of a new product,
- High level of flexibility and scalability of resources, which the organization does not possess, with the possibility of expanding solutions in step with changing business needs,
- The possibility of accurate cost planning and accounting for a tangible effect based on the SLA (Service Level Agreement) conditions agreed with the supplier.
Based on the experience of our customers, the decision to cooperate with the Managed Services provider is influenced by several criteria, the most important of which is the particular area of specialization of the supplier, for example Managed Services for data centers, services pertaining to the management of ERP applications, Business Intelligence, website maintenance and technical support services in a diversified IT environment within the company.
The growing popularity of Managed Services in Europe
The Managed Services model is relatively young and just starting to gain the confidence of entrepreneurs. There is nothing surprising in this, because it results from the evolution of the use of outsourcing services. After the phase of outsourcing technical resources to support the implementation of IT, business is becoming increasingly ready for the next, more advanced forms of cooperation with external partners. The European entrepreneurs takes an ever bolder approach to the possibility of transferring control over a given area of their business to an external provider, despite the objections and doubts related to this process. In this case, a few key questions may help in the decision-making process:
- Do you control the increase in IT costs in your company?
- Do you engage an excessive amount of internal IT resources in tasks which can be classed as maintenance, rather than development?
- Do you observe a seasonal increase in your use of IT professionals, or can you not predict the need for their involvement?
- Does your IT system require development, frequent repair or performance monitoring?
- Are unusual competencies, not readily available on the market, required in the maintenance of your IT system?
If reading this article has already raised similar questions, it may be worth taking a closer interest in Managed Services. It is worth remembering that the model of cooperation which we have described transfers the risks and costs of managing IT systems to an external supplier. In order to improve efficiency it also assumes the responsibility of IT system management, freeing up the customer’s internal IT resources. Another advantage is the fact that it is the customer that specifies the expected effects of cooperation together with the supplier, and indicates the critical parameters.
In summary, Managed Services are not a new tool as such, but in some countries it is visible that significantly growing number of companies have started opting for this form of IT maintenance solution. As with anything new, it involves some uncertainty and risk; however enterprises looking for new solutions and optimizing management costs are increasingly turning to the outsourcing model. Of its many advantages it is especially worth mentioning that this is a bespoke solution, and the enterprise has the ability to assign the most problematic issues in the area of IT infrastructure maintenance to external specialists.
UK – mobile application for domiciliary care providers
Webformed Ltd., British provider of secure cloud-based software solutions that make people and processes more efficient and easier to manage, decided to cooperate with JCommerce on creating mobile application for domiciliary care software ‘CareForIT’.
JCommerce was responsible for building an Android mobile application for home help and aged care workers to create, edit and manage care plans.
This simple and intuitive app shows a timetable with details of the person visiting, the time and location of the visit, and the telephone number. During the visit, the app saves the location of worker as proof of service.
The app contains a fill-in form, customized according to the type of visit (with questions pertaining to e.g. if there was a meal or medicine given, and the condition of the patient) and sends invoices to the service users.
CareForIT Andriod App is available at Google Play
See more JCommerce projects carried out on the UK market
Development of a modern Workforce Management System
JCommerce .NET developers are involved in the development of a state-of-the-art Workforce Management platform for an Irish client.
The .NET developers from JCommerce are maintaining and improving the existing system infrastructure. A further goal of the project was the creation of an API for mobile applications on the Android platform. Furthermore, the core technologies and tools used in this project are ServiceStack, SQL Server, Entity Framework, and SSRS.
The Workforce Management System uses modern touch-screen technologies. The system is connected via cloud software to different devices (PC, tablet or smartphone). As a result, it allows users to manage schedules, time and attendance, get rid of piles of paperwork and make payroll preparation quick and accurate. In conclusion, the application is dedicated to customers from different sectors and can be customized to suit every industry.
Nearshoring – Almost Like at Home
Onboarding in sunny Valencia
The recent launch of JCommerce’s support project for the Dutch company Helloprint is excellent proof that the onboarding process greatly facilitates further cooperation. The outsourcing contract in this case includes the maintenance and development of the QlikView platform for the rapidly growing international online printing service. In accordance with the customer’s wishes, Łukasz Czajka, Business Intelligence specialist, spent two weeks in one of the company’s offices located in beautiful and sunny Valencia.
Łukasz said of his trip: “In June, at the invitation of the customer, I went to Valencia, the third largest city in Spain. The trip was to meet the client directly, to get to know the company and discuss the work that I was to do. The trip should certainly be considered a success, because apart from the tourist attractions (plenty of incredible sights to see and the wonderful de la Malvarrosa beach), I had the opportunity to take a closer look at the style of work at the client’s premises, to assuage misconceptions or doubts and get to know the business “from the inside.” Thanks to my trip, after returning to Poland, the task is much easier thanks to the contact established there and the fact that I met the people who I’m working with on a daily basis.”
As you can see, thanks to the well-thought-out onboarding process, the employee has the opportunity to learn about the project requirements, the users, and build the relationships and trust which are the basis for long-term and effective cooperation.
Onboarding – the first step to quality cooperation.
Those responsible for the decision to begin cooperation in terms of the outsourcing of IT services usually indicate the following questions and concerns:
- communication problems (language barriers, remote communications – video conferencing, teleconferencing, lack of face-to-face meetings);
- difficult contact;
- lack of integration with the outsourced team;
- lack of involvement of the outsourced team;
- loss of control over the quality and speed of the project (risk of dissatisfaction of the final customer);
- coordination problems;
- cultural differences;
- the risk of a bad reception within the company to the decision to cooperate with a third-party vendor (a bad effect on the atmosphere within the team);
- the risk of an ‘us’ and ‘them’ mentality developing within the project;
- bad experiences of one’s own or other companies in terms of IT offshoring;
- unpredictability and ‘surprises’ which may pop up during cooperation.
Without a doubt, these concerns are reasonable, and therefore the organization of such collaboration is especially important in order to minimize the potential risk. From the very beginning honest communication and clearly defined rules should be established, and – perhaps most importantly – the two parties involved must be able to get to know each other better. If it should prove possible, both parties should move toward the process of onboarding, which initiates cooperation and consists of meeting people directly engaged in the execution of the project. Normally, onboarding should last between 3 and 5 days, during which the client managers on the client’s side, such as the Project Manager, Product Owner and Software Architect, meet with the team put together by their business partner: the Project Manager, Technical Leader and developers.
Onboarding is designed to:
- help with understanding the business objectives of the client and the project itself;
- establish the principles and tools of communication;
- establish roles within the team;
- prepare hardware and software for use in the project;
- get to know colleagues through initial integration.
Ideally, onboarding is done on-site at the customer’s premises. Thanks to this process, the whole team has the opportunity to get to know and understand the “client organization”, as well as the people who they will work with. The integration process is of great importance, especially in the team extension model where the project and the work of particular outsourced employees are managed by the client. If onboarding and subsequent integration are carried out effectively, it may even lead to a situation in which the employee will identify more with the final customer than with the organization in which he is formally employed. Strong identification with the client means greater loyalty and engagement from the employee, which translates into greater efficiency and the satisfaction of both parties.
In the case of foreign projects, it sometimes turns out that the onboarding stage can be extended by up to several weeks – as it was in the case of Helloprint. Why do customers from Germany, Finland and the Netherlands choose to extend this initial stage? It gives them a sense of control and security – during those first few weeks, it is possible to get to know the staff, to present their expectations, and finally to verify whether cooperation in the form of the outsourcing model will be feasible. At this stage, understanding and trust are built, without which fruitful cooperation cannot be ensured.
What comes next after onboarding?
Of course, integration and building good relationships do not end with onboarding itself. We realize that over the course of the project, some topics should be discussed face-to-face from time to time. It is also important to remember the need to maintain proper motivation and integration within a team, or people working together. That’s why JCommerce takes care to regularly organize such meetings for their employees.
Depending on the needs of the client, on-site visits and work can also take place regularly. The proportion of on-site work (at the customer’s premises) often constitutes up to 25% of foreign projects. As an example, the team can spend an entire week on-site at the customer’s premises each month, and spend the rest of the time working remotely. From this perspective, nearshoring is no longer something distant, unknown and difficult to manage. Fortunately, Polish developers are increasingly mobile, amenable and willing to undertake foreign travel. Through the experience gained during such trips, they build self-confidence and improve their communication skills, not to mention taking the opportunity to gain international experience and visit interesting places. With the proper organization of cooperation, both parties can gain a great deal.
Data warehouse implementation -financial sector, Ireland
After performing the full business analysis, JCommerce has begun the data warehouse implementation project at Squared Financial Ltd.
The first stage of the project was a analysis of the existing data structures, business processes and reporting needs. Therefore, the new data warehouse has been built. As a result this laid the foundations for the Business Intelligence class system. It was fed with data from one transactional platform.
As part of the implementation work carried out, specialists from JCommerce have designed and implemented the relevant mapping tables and ETL processes.
Currently, the implementation of the first reports and analyses is carried out. An increase of the number of production systems from which the source data will be loaded to the data warehouse has been already planned in the next stages of the project.
Ultimately, the Data Warehouse will retrieve data from the remaining transactional platforms. As a result this will give users fast, flexible and easy access to consolidated information.
The implementation process will continue until December 2016.
Nearshoring – the Good And the Bad
Nearshoring? Offshoring? Rightshoring
Certainly, the benefits of having a team of in-house IT specialists are that it is subject to internal control from beginning to end, it is possible to maintain direct contact with employees, and also to build and maintain the relationships necessary to ensure an appropriate level of quality and innovation. In other words – employees who know their business, their employers, as well as their vision and goals, are by definition more involved. Outsourcing IT services can mean breaking this bond. In addition, if it comes to transferring part or all of the IT processes to remote regions of the world, such as to powers of outsourcing like India and China, it may be that we lose the possibility of restoring links under the new terms and conditions – whether for reasons as mundane as the time difference, or more complicated ones – such as cultural differences.
There is another way. Nearshoring is the concept of outsourcing processes to less distant regions – both geographically and – and perhaps above all – culturally. This model allows you to maintain contact, to create an understanding and a connection, without having to adapt to a different mentality and organizational and legal culture (differences in the latter, especially, carry a big risk for the company).
‘Do you speak English?’
How does it work in practice? The British are probably the best people to ask about this, as they have been taking advantage of the benefits of nearshoring for years. For obvious reasons, they choose the regions where English is common among potential employees. Not surprisingly, Poland is often the chosen country, and indeed in this year’s EF English Proficiency Index 2015 report was in the Top 10 countries in terms of whose citizens are most proficient in English as a Second Language.
A very interesting example of nearshoring in practice is the cooperation between one of the British startup and JCommerce. Startup came up with the idea to create a portal on which available offers from bookies are gathered in one place, covering many different disciplines. The application enables the comparison of rates and special bookmaker offers as regards cashback, as well as estimating the expected winnings. A brilliant idea, but it required a team ready to take on the challenge of creating this innovative platform and putting the idea into practice. In the absence of specialists on the UK market and the high costs which resulted, they turned to Poland in the search for a partner. And they hit the bullseye!
So then why Poland?
According to startup decision maker, the selection of a Polish outsourcing company resulted mainly from his first impression. After sending the initial enquiry, the response from JCommerce came back quickly and was the most competent response. His initial doubts pertaining to the language barrier vanished very quickly. The ice was broken through openness, communication skills and highly proficient contact with the customer service personnel. It quickly became clear, too, that the company had experience in such projects, knew what was expected and how to fulfill the expectations of the client. They proposed a team of programmers who were not only able to perform their assigned tasks, but show initiative and thus propose the best solutions.
After signing the contract, which gave each party a sense of security from a business standpoint, and provided for a five-month trial period, the team got down to work. To cut a long story short, after that period of time, both sides were so pleased that they decided to continue working together.
Critical success factors
We asked both the client and developers which factors were decisive in ensuring the success of cooperation. Both sides mentioned, among other things:
- openness on both sides;
- the first face-to-face meeting, having started from a knowledge transfer workshop over several days;
- the use of scrum methodology in the project, with a high level of involvement on the customer side;
- the flexibility of two-week sprints in the project;
- daily stand-ups, meaning 15 minute on-line meetings, during which the most important issues for the upcoming days are covered;
- joint game planning – a game involving programmers in decision-making; the client, seeing the vast knowledge of team members, attaches great importance to their ideas and suggestions; decisions are taken jointly by the owners and JCommerce experts, which gives both parties a sense of unity, teamwork and contribution to the project.
- Both sides were able to get very involved due to the fact that a strong relationship between the team and the client was created. The client treats the team like an integral part of the company, while developers have the feeling of significant influence on the project, which increases their motivation.
So it turns out that remote cooperation can have significant advantages for both parties. On one hand, the customer gets true professionals at a reasonable price, while on the other hand, specialists are able to develop and work on interesting projects using the latest technology. The need to organize meetings online ensures regularity and consistency, which means – paradoxically – that such contact is often more regular and effective than if the IT department was “in the next room”.
Nearshoring cooperation can bring significantly more unexpected benefits. Opening up to other regions and new markets could lead to the emergence of entirely new business possibilities, opportunities and points of view.
JCommerce has moved up in the Computerworld TOP200 2016 rankings!
JCommerce was ranked the 4th largest IT body leasing service provider in Poland according to the Computerworld report.
This was a year of intensive growth for JCommerce, which has been reflected in the Computerworld TOP200 report. This report is the most important of this type of study, which analyzes the current state of the Polish IT market. One of JCommerce’s biggest achievements is being among the five largest IT body leasing service providers in Poland. This is a great result and an excellent starting point from which to push for a podium finish this year.
The rest of JCommerce’s results are also cause for optimism. JCommerce was ranked the 8th largest supplier of mobile applications (a rise of 6 places), 9th in Business Intelligence systems (up 2 places), 10th in Web applications and portals (up 3 places). What is more, we are finally 28th in Enterprise Resource Planning (ERP) systems (up 4 places).
Also, in terms of organic growth, JCommerce can consider the last year a huge success. Our company recording a 60% rise in revenue, a 41% growth in employment and a 25% increase in revenue from exports.
This is the result of the strategy of expansion onto Western markets. In addition, the company’s position strengthened significantly in all ranked industries. We growth at sectors such as banking, media, trade, industry and construction, energy, healthcare. As well as the IT sector and public administration.
Outsourcing After Brexit – a Central / Eastern European View
Let’s start with what we have to lose. Piotr Zyguła, CEO of JCommerce SA, is moderately pessimistic. “The share of profits from the UK market in terms of the total export earnings of our company is about 7%, so any problems with maintaining this figure will not significantly affect the financial position of JCommerce. However, in recent years this share of earnings has consistently increased, and we saw further cooperation agreements as an opportunity to build a strong position on Western markets. For our employees, who of course are key stakeholders, it’s an opportunity to work on interesting international projects. It would be hard to give all that up.”
In theory, not much will change in the near future. Until completion of the “divorce” from the EU, which will probably take a few years, the United Kingdom remains a member of the Union and all parties are obliged to abide by the existing rules. In practice, however, they may be “lost years” because Brexit is inherently associated with great uncertainty about the future form of relations between the EU and the UK, which in turn has a negative effect on the markets and can stifle business relations, which do not take kindly to risk. Among other things, it is why EU officials have already called on the British government to begin the Brexit process.
The strength of the pound to date has made IT outsourcing to the countries of continental Europe, especially Central and Eastern Europe, as well as to Asia, very profitable for the British. Brexit brought about a sell-off of the pound, while the dollar, the euro and the Swiss franc became relatively more expensive. The cheap pound makes services abroad, including outsourcing, more expensive. The pound is also cheaper in relation to the Chinese yuan and Indian rupee (both are popular markets for outsourcing IT services). In our region of Europe the countries that stand to lose most of all are those that have adopted the Euro, such as the Baltic countries, Slovakia and Slovenia.
What does all this mean for Poland? “Just like the currency of Hungary, and the Czech Republic, the zloty is getting cheaper. Paradoxically, these problems act to stabilize the position of domestic outsourcing companies – a cheaper currency allows you to remain competitive. Outsourcing in Estonia, Slovenia, India, and China is more expensive because of the cheaper pound, so Poland is becoming more attractive for British business partners. The only question is whether the mood associated with Brexit will lead them to avoid cooperating with us?”– wonders Piotr Zyguła.
Life after Brexit – the new legal reality
Some of the major advantages of outsourcing IT services to other countries of the European Union for British companies were the similar legal systems and the universality of EU standards. British companies collaborating with business partners – for example from Poland – can count on the same treatment as Polish companies, so they can claim damages without major problems, as guaranteed by EU law.
After the UK leaves the EU, depending on the model of further cooperation, the systems might become more and more different. Piotr Zyguła expresses his doubts: “Will the United Kingdom continue to participate in the single EU market, which implies the free movement of goods, capital, services and workers? If so, to what extent, if not, what barriers will arise, and how much will they cost? In this context, will we be able to remain competitive?” Business abhors a vacuum, so sooner or later, both sides will be forced to find new business partners. But will it bring them increased benefits? And how many companies will go under in the meantime? It is difficult to estimate at this point.
A weaker union, a weaker market
The outlook for the outsourcing industry could be adversely affected by a potential economic slowdown. Some estimates say that Britain could lose up to 5% of its GDP within the first few years, during the process of its exit from the Union. On the other hand, the economy of the Community will also suffer, although the effects will be spread more evenly throughout the individual member states. The EU budget also stands to suffer losses, which will mean fewer resources to support innovation and new technologies, which will probably affect the entire IT industry, indirectly at least. Years of uncertainty, falling investor confidence and – most likely – price increases will probably reflect negatively on the level of IT investment, both in the UK and other European countries. A domino effect will probably arise that could affect Polish companies as well.
Will a Polish plumber replace a fellow Pole?
Perhaps, however, these problems will not dissuade British companies from outsourcing, especially if it turns out that the lack of suitable staff will begin to further strangle the British economy. After leaving the EU, the British labor market may be (although not necessarily) closed or restricted. This doesn’t just affect the proverbial Polish plumbers, as it will also complicate matters for the IT industry, and as a result the number of vacancies for engineers may increase. During this year’s London Technology Week, analysts predicted that about 850,000 more IT specialists will be needed in Europe by 2020, of which 180,000 will be required in the UK alone. One may have doubts as to whether these specialists will be found on the local market, which is already saturated and which is already straining under the weight of a lack of manpower (not only in IT, but in other industries as well). This can lead to an increase in the salaries of specialists on the local market, and de facto push British companies to take advantage of outsourcing to a greater extent, in order to fill staff vacancies.
The British view
Brexit itself is of course not universally popular with the British people, 48% of whom voted Remain. Andrew Kirby, a teacher for Dynamic English in Katowice, Poland, which has been co-operating with JCommerce for three years now, expresses uncertainty about how the British decision will affect his countrymen, having voted by proxy in the referendum. “It is scary to think that 1.3 million people” – the difference between the number of Leave and Remain voters – “can determine the fate of not just our country, but the entire continent of 500 million people.” However Kirby stresses that nobody really knows at this stage just what the effects will be.
Andy Gillin, CEO of Dynamic English, is also unsure of what to expect. “Nobody knows what’s going to happen, that’s what people are afraid of. I don’t think Brexit will be an easy process, but all we can do is hope that business is not affected too dramatically. Perhaps it could even bring about some unforeseen opportunities in business – we’ll see! But we just don’t know.”
The coming years will see great uncertainty and an unpredictable level of risk. The IT outsourcing industry will have to learn how to operate under such conditions. As we have seen, Brexit involves significant risks, but also brings opportunities for development. Some companies can run into trouble, but those which are most flexible and ready to take risks may turn this situation to their advantage – as usually happens in times of crisis. So what can be done today? I guess – along with the rest of the world – we can only look at what is happening in Downing Street and keep an eye on developments.