How Brexit will Impact UK and Europe’s Outsourcing Market
Given the fact that Britain has finalized its leave from EU through its referendum, the process of separation has slowly begun to take its course. These are historic times that we live in, as we are witnessing one of the most important countries that was one of the first to join the EU leave this block and head towards a new political and economic path.
The ramifications of this major event will be great and there are a lot of people in the business world who are feeling unsure about what the future will hold for Britain and the EU. However, there are a few of those who are talking about how this will effect business owners in the UK, who outsource services to companies in the EU.
Things will change
All the businesses, either from EU or Britain, is going to be greatly affected in the near future. Some are already feeling the consequences of Brexit, and more is yet to come. Leaving EU means that businesses in the UK will no longer be able to trade and do business with companies from the EU tax free.
The new taxing laws will soon be put in place and the fact that it is uncertain how they will look like is only making enterprises shake a bit more. Additionally, there are many upcoming regulatory and administrative procedures that the whole UK will have to go through in the future, and this means higher prices, and greater downtime, since outsourced products will take longer to get from EU to Britain.
Costs will increase for both sides
There are a lot of businesses in Britain that outsource to companies in the EU to finish some of their business processes. This is where there are a lot of supply chains which are both in the EU and the UK. Some business industries that will have the most problems include automotive industries, financial services, and the chemical industry. For example, there are a lot of car dealerships in the UK that sell vehicles and certain parts for these vehicles are manufactured somewhere inside the EU.
There are even vehicles which are mostly produced in factories in Germany or Italy, and this means that, due to new taxes, the prices of these parts are going to become more expensive. For businesses in the EU, this mean that they will have to raise their prices due to higher costs of transferring products, while the business organizations in the UK will have to rise their selling prices in order to cover their newly formed expenses.
New outsourcing markets will open for UK businesses
It is clear that businesses in Britain will have issues due to greater tax tariffs and regulations. However, given the fact that Britain now doesn’t have to follow EU regulations, and has new markets outside the EU available, companies might be able to find good outsourcing options which are now available in other countries and continue to work as they did before. The only question is whether those companies will be able to manage and find quality collaborators to compensate.
Still, the big question is the distance, as the EU is fairly close to Britain. How much are the costs going to be in this new region? Another troubling issue for businesses in Britain could be the quality of service they could get from outsourced companies outside the EU. Simply put, they might be able to outsource for less money, but they also might end up with low quality services that would ultimately cost them a lot.
The reality is that nobody can tell with certainty how things will be in the next couple of years and what exact changes are there to be expected concerning tax regulations between Britain and the EU – only time will tell. The best thing for companies on both sides is to simply try and find new ways for creating business partnerships which are profitable. It’s really a double-edged sword; those companies that make great use of the new circumstances might even be able to increase their profits. Those that don’t, will lose money.
Samantha Black is working in BackOfficePro from past many years. She is a dedicated and a passionate Content Writer.