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Argos blanket bans UK contractors and outsources digital jobs overseas – another IR35 backfire on tax revenues

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Sainsbury’s-owned Argos is preparing to offshore the work of its Milton Keynes-based digital team to Mumbai, India, having determined its contractors to be working inside IR35, Computer Weekly has reported. The news comes at a time when UK unemployment is at 5.1 per cent and the Treasury is looking for new ways to generate tax revenues.

Around UK 50 contractors and permanent employees who make up the Argos digital team – including software developers and designers – will be affected by the offshoring decision, sources inside the department claimed to Computer Weekly.

“As part of its offshoring strategy, sources further claim that the company has offered the opportunity to relocate to Mumbai to those affected so they can continue performing the tasks they are currently responsible for, but no relocation package will be provided,” said the news report.

IR35: is it failing the UK’s economic recovery?

Former Argos CEO John Rogers in 2018 told a local Milton Keynes news site when it was recruiting 150 permanent tech jobs and developing its in-house digital platform, “It’s great to see a British business like Argos leading in tech. Around 60 per cent of our business, today starts online and over 70 per cent of those sales are on mobile devices. This investment in our people will ensure we remain at the forefront of retail technology.”

However, Argos has since stopped printing its catalogue and has consolidated its digital efforts across Sainsbury’s and Argos under the direction of new CEO Simon Roberts. Come 2021, the business is taking a very different approach and outsourcing its digital team to India.

Herd IR35 mentality at the expense of UK workers?

Other industries have been pulling the plug on freelancers before Brexit or IR35 private sector rules sank in.

According to IT contractors that spoke anonymously with efinancialcareers this time last year, hiring companies, such as HSBC, decided to ban consultancies, including Infosys, which is owned by the Chancellor of the Exchequer’s in-laws, from using self-employed contractors that have a limited company or PSC structure. Instead, contractors must go on the Infosys payroll, for example, or work somewhere else.

UK Contractors working with Infosys also claim the company is bringing in contractors from India on short-term visas. One finance contractor said in the report, “A lot of these people are very aggressive and only want to employ their batch mates from IIT…They hire more on technical skills than soft skills, and bid down rates, which makes for a brutal working culture.”

Where does your hiring company stand on IR35?

The website Offpayroll keeps an updated tally on companies’ positions on IR35 with agents providing additional feedback for contractors. Other retailers have decided to not hire freelancers, such as Next.

Recent blanket bans on PSC contractors in the financial and banking sector include T. Rowe Price, Starling Bank, and UBS, according to agents on Offpayroll.

Starling Bank founder, Anne Boden, said the digital bank was creating jobs in both tech and customer services, with no functions outsourced overseas.

The digital bank which has created more than 200 jobs in Southampton is to expand in the city, reported the Hampshire Chronicle.

Starling brought customer service and technical jobs to the area’s Town Quay when it chose the city for its first base outside London in 2019, said the report. It currently has 226 people based at the Beresford House site – and Boden has confirmed that it has committed to more space.

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