The Brexit Reaction: Are Software Development Companies in the UK Floundering?

Thoughts & Solutions

The withdrawal of the United Kingdom from the European Union was decided by a landmark referendum voting in June 2016. Brexit became a reality we never saw coming, and soon a cacophony of possibilities about the ramifications of this break-up on the UK market and its global sentiments emerged.

Post-Brexit Business Challenges - Where Does the UK Stand?

Immediately after the historic split, the after-effects started nipping at the UK’s feet. The United Kingdom slipped one place down, from fifth to sixth, in the global GDP rankings. The pound slumped. The import costs became expensive. Inflation spiralled. And, the talent pools stood the risk of drying up with limited migration movement. So, the prognosis about the stuttering UK economy was actualizing and wasn’t expected to severe down anytime soon.

Cut to present, the UK, at many levels, is still stumbling on its feet and tackling a host of challenges:

a. The Crumbling Talent Wall

Diminishing talent pool and difficulties in finding the right set of skilled professionals owing to restrictive inter-state migration and curbs on the freedom of movement is a big crisis, and increasingly being called into question. Shortage of manpower has resulted in higher labour costs, mounting more troubles for the beleaguered UK businesses in finding the right talent.

b. The Plummeting Pound

Pound devaluation has made it extremely challenging to hire people and run operations in the UK where costs are skyrocketing. Given the weakened pound, there’s also a steep fall in the price of exporting services from the UK, which is serving as a major deterrent to higher GDP prospects and hurting the economy. On the other hand, if the UK outsources services, it’s coughing up an amount far more than what it’s actually making, because of pound’s shrunken value in exchange of several global currencies. This is turning into a fraught case of liabilities exceeding assets, presenting the UK’s case of declining economic prowess.

c. The Rallying Start-ups

An exponential increase in the funding and the Government’s push has made start-ups a lucrative employment option. As growing companies, they have been attracting top-line talent with a promise of offering productive, skilful tasks over the menial maintenance jobs.

d. The Frustrating Project Delays

The scarcity of manpower and huge cost overheads have resulted in delayed software development projects, resulting in missed business opportunities and hampered growth.

This is not to say that Brexit is the only important macroeconomic event that has cast clouds over the UK’s economic competitiveness and national productivity. Leaning on the cues, a majority of business leaders in London have exuded confidence in the power of outsourcing to mitigate the deepening skill crisis. The advantages of availing skilled expertise at a cost-effective price make outsourcing an attractive option to refill talent and boost efficiency. That said, the biggest disservice of outsourcing to UK businesses is the poor work quality, which often leads to wasted resources, large iterations, and deferred work timelines. This is further compounded by issues, like poor communication and derailed/failed projects.

Since many companies have already burnt their fingers at outsourcing in the past, developing cohesive and controlled business outsourcing models is the writing on the wall for seamless work contracting.

Business Outsourcing Models: Key Takeaways

Outsourcing is a tough nut to crack. Deciding what, how and when to outsource; where to enlarge upon and where to jettison, can be complicated, and so, should be carried out with scrupulous planning to achieve business sustainability. Whether a business outsources a single component or has established outsourcing as a cardinal functional area, a tactical approach can help contract work efficiently within time and cost calculations, and save the day. Here are a few takeaways to consider while outlining a business sustainability model that delivers.

a.  Start with small, well-defined fixed price engagements. This can avert off lengthy haggles over right price structures and will result in cordial, long-term business relationships.

b.  Embrace Global Delivery Model to discover the real value and cost efficiencies of outsourced development. The model entails a thoughtful and intelligent resource allocation, both onshore and offshore, to achieve larger efficiency benefits, cost savings, and faster project completion. Companies working on the lines of the Global Delivery Model have large offshore teams, and a small in-house team, having a project manager and a PM+ lead maybe, to manage the project.

c.  Alternatively, build a small team of 2-4 members and let it work as an extension of the existing team.

Next Stop for the UK Outsourcing

Kellton has successfully delivered hundreds of outsourcing engagements across the globe with an aim to streamline operations and deliver sustained business value. We offer end-to-end, result-oriented outsourcing solutions, which are geared towards revolutionizing task chains and breathing agility into workflows for leveraged growth. Our outsourcing services portfolio has been applauded for:

●     Delivering 100% customer satisfaction to the businesses in the United Kingdom, and 90% globally 
●    Integrating seamless onsite (UK), near shore (Ireland) and Hybrid models (onshore + offshore)
●    Ensuring agility of a small company with the stability of a large public-listed organization