A ready-made solution for the UK’s digital skills shortage along with the risks and costs of IR35
“Getting IR35 right now, as the country is opening up and organisations are starting to recover after the impacts of the pandemic, is crucial and is the first step towards benefitting from a truly flexible workforce,” Matt Fryer, head of legal services at Brookson Legal
The UK is facing a critical skills shortage as a result of new government legislation (IR35 specifically) and the early effects of Brexit. Compounding this challenge, organisations face risk of liability for unpaid taxes, national insurance contributions and penalties should they be found to be in violation of IR35.
According to a recent McKinsey report, up to 94% of the UK’s workforce will lack the skills they need by 2030, with a further 10 million people will be under skilled in leadership, communication and decision-making 1. Moreover, current data from the Recruitment & Employment Confederation’s Job Recovery Tracker reveals more than 190,000 job postings, or just over 1.55m job vacancies, in the UK alone 2.
A major contributor to the current crisis is the UK’s IR35 ‘anti-avoidance tax legislation’ which came into effect in April last year, and effectively requires all companies to treat contractors as they would full-time employees. In other words, contractors can no longer claim tax benefits while working for only one or two companies, while the onus falls on companies – not contractors – to prove their contract staff has divested employment, or be liable for tax fines.
In a nutshell, this has suffocated the contractor market in the UK which, combined with the constraint on available EU skills due to Brexit, has resulted in a grossly undersupplied market for digital and software development skills.
Thankfully it’s not all doom and gloom. One of the offshoots of the Covid 19 pandemic has been the massive shift towards work from home (WFH), and consequently employers opening themselves up to hires from further afield. In fact, according to tech marketplace Spiceworks, more than a third of organisations say they plan on extending WFH policies even after the pandemic has ended 3. After all, since skilled staff have been shown to be as productive, if not more so, following the WFH shift, so it follows that companies are no longer dependent on hiring local.
In my previous article on IT augmentation I suggested that companies are increasingly looking to remote hires from beyond the UK’s borders, with South Africa being a particularly ripe market for finding the high-level of skilled staff needed for software development work. In my opinion, this is preferable to the other option: headhunting skills from other companies. In a constrained job market hamstrung by legislation and political manoeuvrings, headhunting is a very expensive and time consuming exercise that doesn’t necessarily guarantee results.
Augmentation, on the others hand, does. Not only is vacancy filling through augmentation relatively inexpensive, it’s also very fast, often bypassing the normal red tape and onboarding requirements for full time employees and therefore greatly reducing risk. It’s also important to draw a distinction between a staff augmentation service and body shopping. Augmentation service providers like DVT don’t simply place specific people in specific roles, but rather fill vacancies with the right skills, ensure the quality of the service, and manage all aspects of the personnel deployed whether they be by one person or a whole team. Additionally any required personnel changes are covered without impacting the service to the company, and burst capacity requirements can met through ramping up (with more staff or more senior staff) and scaling down (with fewer people or more junior staff) as and when the engagement calls for it.
Most importantly, there are no penalties to using staff augmentation, not as a result of IR35, or Brexit, or any other regional factor. This benefits companies in mainland Europe as well, where staff shortages are also critical, since UK-based companies can extend their staff augmentation services from DVT, for example, to their European field offices with no logistical issues.
If your company finds itself short-staffed, or if you’re planning projects that will need additional skills to progress, consider a staff augmentation service from DVT as a ready-made solution today. To find our more, contact Jason Bramsden on email@example.com or visit https://www.dvtsoftware.com/services/staff-augmentation