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Relevance of foreign outstaffing in modern Russian reality

On September 21, the CEO of «IT DataWare» company, Sergey Gorbachev, participated in a broadcast by the publishing house «Kommersant» titled «Relevance of Foreign Outsourcing in Modern Russian Conditions». The host of the broadcast was Anastasia Manuilova, an observer in the economics department and editor of the «HR Technologies» application.

The term «outsourcing» appeared in Russian business circles in the mid-1990s, but with the entry into force of Federal Law No. 116 in 2016, which regulates temporary labor, outsourcing services underwent some changes. «Before the establishment of IT DataWare, I was involved in various projects in the financial sector, and I am used to thinking about the outsourcing services we provide as a personnel equivalent of returnable leasing,» he said. He noted that recently he has completed his business projects in Russia and, starting to work abroad, began to think about how to help expand the geography of his business for other Russian companies.

Currently, when hiring employees in Russia, employers are obliged to pay social insurance contributions ranging from 30% to 15% of the labor payment fund, depending on the employee's salary and the size of the organization. In addition, the company cannot credit VAT on labor costs, which include wages (with personal income tax) and insurance contributions, which increases the total labor costs by an additional 20%. The final amount of additional labor costs ranges from 65% to 48% of their take-home salary.

"Using the outsourcing services of IT DataWare, taking into account the submission of Form NDFL-3 to the Russian tax service (in accordance with the agreement on the avoidance of double taxation - SIDN, for payment of the difference of 7.5% of the paid income tax in Uzbekistan), companies can save from 24.5% to 43.5% depending on the employee's salary (the lower the salary, the greater the savings)," Sergey Gorbachev noted.

"In case of using programs to maintain tax residency in Uzbekistan, which are also offered by IT DataWare (+1% to the cost of outsourcing and signing a contract for educational services with our partner in Tajikistan), the total savings can be from 31% to 48% + payment for training services in the chosen specialty."
"We do not encourage Russian employers to save on their own employees by reducing their tax and insurance contributions. On the contrary, a significant number of our clients, after signing a contract with us for staff outsourcing services, have increased their employees' salaries, thus sharing the benefits they receive" Sergey Gorbachev noted. Furthermore, he emphasized that Russians who enter into an employment contract with IT DataWare for more than six months are exempt from mobilization and are required to deregister from military service in accordance with Article 10 of the Federal Law "On Military Duty and Military Service" dated March 28, 1998, No. 53-FZ.

Russian companies can remotely enter into a contract for staff outsourcing services with IT DataWare. In most cases, there is no need for the company's employee to travel to Uzbekistan. The cost of outsourcing services amounts to 16% of the employee's net salary (including a fixed 7.5% income tax).