Crystal Umbrella

Despite the actions of major banking institutions last year, which saw pay rates for specialists in IT contracting being summarily slashed, 2011 was actually a rather good year for those who earn their daily bread in the IT skills market. Data from online IT recruiters CWJobs.co.uk and JobAdsWatch.co.uk reveals a strong rise in job postings and a healthy growth in pay rates – the fastest, in fact, for three years.

2011 saw a veritable explosion in mobile apps and, unsurprisingly, the lion’s share of the recruitment space was taken by developers: between them, they were responsible for 41% of all the IT jobs posted in Q4. There was also encouraging news for PAYE umbrella techies – contractor billings rose by 25% in Q4 2011.

London enjoyed a powerful 28% rise in IT postings in the last quarter of 2011 compared with Q4 2010. According to CWJobs, this was almost certainly due to East London’s City Tech initiative, which aims to generate IT opportunities for tech start-ups in the area. Over three quarters of permanent IT posts (77%) were offered in the South and West of the country.

There was little cheer for public sector workers, however: the sector has now experienced nine consecutive quarters of contraction, with job availability plunging a further 16% in Q4 2011.

After the swingeing jobs cull it performed in the immediate aftermath of the recession (2008-2009), the financial sector seems to be bouncing back with significantly improved job postings toward the end of last year. Almost a quarter (21%) of all available IT jobs are now in the finance sector.

Christmas Eve marks the day that the AWR’s first batch of ‘equal treatment’ provisions kick in to effect for temporary workers, a significant proportion of whom, of course, are made up of highly skilled PAYE umbrella contactors.

This Saturday sees the end of the first 12-week qualifying period defined by the Agency Workers Regulations, which came into effect on 1stOctober. But what are the implications for contractors working through umbrella companies?

Tom Hadley, Director of Policy and Professional Services at the REC, quickly reassured observers that “nothing cataclysmic” was on the cards. However, recruiters should use the date as a prompt to ensure that they’re “as prepared as possible” to deal with claims or queries from affected workers, he added.

Mr Hadley went on to say that the REC’s priority was ensuring that good internal mechanisms were in place to nip misunderstandings about the regulations in the bud. A huge surge in activity was unlikely, he believes, but went on to say:

“Ultimately, the best way of avoiding any tribunals will be to be to ensure that there are clear and transparent communication channels between agencies, candidates and employers.”

He anticipated that the number of tribunals resulting from the AWR would be limited, a view that the REC shares with other organisations such as ACAS. On a general note, he said, the overall demand for agency staff – including skilled PAYE umbrella contractors – remains strong. He pledged that the REC will continue to monitor the impact of the regulations “as we move past the 24^th December milestone.”

A new study suggests that contractors working through umbrella companies are being increasingly sought by the UK’s SMEs, even though economic conditions remain uncertain.

The report by the international office space supplier Regus indicates that SMEs are turning to skilled PAYE umbrella contractors in an effort to remain rapidly scalable in precarious times while simultaneously hiring the staff they need to complete essential business projects.

Moreover, SMEs trading internationally are taking the lead in capitalising on flexible workers – 49% of them plan to hire freelancers, while 39% intend to hire remote workers.

Paradoxically, it seems to be the very grimness of the prevailing economic winds that has prompted the uptake of contractors and other freelancers; business confidence amongst SMEs has actually fallen by 20% since April, the report reveals, and profit and revenue growth has also been tumbling. However, SMEs trading with oversees markets show a markedly better profile than their domestic counterparts, with business confidence reaching 88% (compared to 79% for domestic firms). They’re also more likely to be reporting increasing profitability (30% compared to 20%)

Regus’ Regional Director, Celia Donne, explained, “SMEs realise that they must continue investing in growth, so freelance and remote working are becoming increasingly popular solutions to increase headcount while remaining flexible and rapidly scalable. 27% of the employed population in the UK are now deemed to be flexible workers, which illustrates the significant shift that has already taken place in the employment market.”

We’ve recently reported some gloomy news for the IT contracting world, or at least those PAYE umbrella contractors working in banks and financial services who have seen substantial cuts to their pay rates in recent months. However, new research from a specialist recruitment agency suggests that City firms are engaged in a bidding war to secure the talent they need in the IT skills market.

Salaries for senior IT professionals working in hedge fund management have surged by 30% since 2010 and bonuses by 60%, the specialist IT recruiter ReThink reveals.

Commenting on the figures, ReThink’s Head of Financial Services, Fhamid Malik, said “A shortage of candidates has meant that bidding wars for top staff can easily erupt – which can result in base salaries being increased by up to 30% to stop key members of their IT teams leaving.”

The skills that appear to be most in demand are predominantly .Net and C#, but tekkies who can combine sound technical knowledge with experience in trading and pricing analysis are especially sought after. The clamour to keep contractors and other staff with the requisite IT expertise has reached such a point that, in a growing number of cases, bonuses are being paid on a quarterly basis rather than annually, as is customary.

Less encouraging data, however, emerged from the specialist financial services recruiter Astbury Marsden, which paints a rather different picture to the “bidding war” scenario uncovered by ReThink. According to Astbury Martin’s data, cost cutting in the financial sector has led to a surfeit of IT contractors looking for work, who rose by 30% on last month’s figures.

Over the years, PAYE umbrella contractors in the IT skills market have acquired a reputation for their forward-thinking embrace of flexible working arrangements. However, a new study suggests that most of them actually rate job stability most highly in their list of priorities.

Specialist recruitment agency Elan commissioned the survey of 500 IT workers, asking them to rank their top three priorities for moving into a new role. From IT business analysts to those holding support or developer roles, IT contracting professionals are less the adventurous ‘guns-for-hire’ of popular mythology and more the conservatively security-seeking family men and women of everyday life.

Although the proportion of permanent workers who rated job stability as their top priority was highest (83%), a surprisingly high number of IT contractors shared their views – 67%.

The results suggest that contractors and permanent workers alike are being affected by the climate of economic uncertainty that hangs ominously over the UK at present. Moreover, it may also suggest that the IT contracting workforce today is a little older than it was a few years back – people in their thirties with family commitments and mortgages are more inclined to seek work stability than young adults in their twenties.

Flexibility about working hours, however, came in as the second highest priory, with 68% of permanent workers and 60% of contractors choosing it as the ‘runner up’ priority. Both groups selected technical training as their third priority in roughly equal measure.

IT contractors, it seems, are rather more ‘cuddly’ in their approach to working life than their folklore image suggests.

Although news has been circulating over the last couple of weeks that a number of big financial institutions have cut their pay rates for contractors in the IT skills market, the ranks of highly skilled professionals making a living out of IT contracting remain at a very healthy level, according to recent research by the PCG.

The PCG’s survey of the UK’s freelance workforce found that 574,000 of the country’s 1.4 million freelancers were IT contractors. 200,000 of them work through umbrella companies, with the remainder made up of those who work through their own limited companies, those on agency payroll and those who work as sole traders.

The figures will come as a reassurance to IT pros considering contracting as a career; compared to ten years ago, many companies, especially in the financial sector, are relying more heavily on IT contractors than at any time previously. Even though high-profile financial institutions like Lloyds, RBS and Nomura have announced cuts in their hourly rates for IT contractors of around 10%, it is clear that the IT skills market is much bigger than finance alone. Topping the corporate agenda for many companies are the twin issues of developing cloud computing technologies and improving information security – bread and butter issues for IT freelancers.

Not only that, but with the burgeoning rise of mobile technologies amongst the general workforce, those IT professionals with expert knowledge in devising tailor-made mobile applications will remain in high demand, as will those with .Net and SAP skills.

Despite the finance sector’s penny-pinching, lucrative contracts for IT specialists still abound in other sectors. Nil desperandum!

An intriguing development this week may result in a surge in demand for PAYE umbrella contractors working in the IT skills market.

New calculations from internet leviathan Google forecasts that, over the next five years, the UK will see the creation of 365,000 new jobs as a direct consequence of British firms exploiting the internet successfully. The figure was calculated by Google’s in-house economists, based on predictions for the UK’s GDP growth over the next four years (2011 – 2015).

Commenting on the estimate, Google’s European CEO Phillip Schindler said that, if anything, the economists were even being somewhat “on the conservative side” in their forecast. The facts suggest that, despite difficult general economic conditions, the web’s most successful operators have continued to grow strongly. The internet now accounts for a sizeable one fifth of GDP growth.

Mr Schindler urged government ministers to do more to encourage this tech-revolution. He said “From what I have seen I think the government really understands there is a need to drive technology and innovation. What are the areas I would double-down on? The first one is to lower the barriers to innovation. A government – rather than saying where I regulate – should rather say how can I protect and actively create the space for innovation.”

Google is leading the way on this issue and plans to expand its base in the UK, beginning with new jobs at the company’s third UK office in Soho.

If the forecast is accurate, experts in IT contracting could be in for a busy and lucrative time.

A dispute between the Royal Bank of Scotland (RBS) and Britain’s trade union, Unite, has highlighted the upsurge in contractor payroll in the UK. Whilst RBS has cut large numbers of permanent staff, an email leak over the bank holiday has revealed that around 3,000 freelancers are currently being used by the bank. However, Unite slammed the news, arguing that contractors should not be used in replacement of permanent members of staff.

The argument stems from a leaked email from Hays, the recruitment agency, reminding contractors to submit timesheets before the weekend of the latest bank holiday. Criticising the move to increase contractor payroll instead of having permanent employees, Unite’s national officer, David Fleming, said “It is wholly inappropriate that RBS, backed by taxpayers, appears to be throwing money at thousands of contractors.”

Freelancers association PGC however hit back at the criticism of RBS, expressing that it was a ‘knee jerk’ reaction. The Deputy Chairman of the group, James Collings, explained “RBS, in common with many organisations throughout the UK, see the merit in using a skilled and flexible freelance work force when and where there is a demand for their talent and paying these businesses a market rate.” He added that, with one in 20 now working as a freelancer, the contractors’ community was on the rise and had every right to be employed by corporate companies such as RBS. Whilst Mr Collings expressed concern at the leaked Hays data, he made it clear that contracting in the UK is becoming more prevalent than ever.

It has been revealed by the Recruitment and Employment Confederation (REC) that, with many companies reducing their plans to expand permanent staff, independent contractors are set to benefit. With the economy’s future remaining uncertain, the next quarter will see more temporary workers taken on as firms look at payroll outsourcing and IT contracting instead of having in-house staff.
With the economy remaining turbulent, it was shown that, in respect to staffing over the next three months and indeed the next year, plans envisioned at the start of the year to add employees to firms are to be downgraded. The result will see increasing work for temporary staff and independent contractors.

Director of research at REC, Roger Tweedy, explained that the downgraded company plans were an indication of the “uncertain economic context.” He added “With the economy continuing to stagnate, businesses will understandably remain cautious, which is why we are seeing an increase in the longer term demand for flexible staff, such as temporary and contract workers.”

With 83% of firms revealing that contract workers would stay at current levels or increase over the coming year, the future looks bright for contractors. Over the next quarter alone, 79% of employers said temporary staff would be boosted or held steady at a minimum. With payroll outsourcing and IT contracting two specific areas that are being utilised by firms to cut costs, those in these sectors are set to see rising amounts of freelance work.

It has been revealed in a new survey that up to three quarters of small business owners find it difficult to go on holiday and leave their work concerns at home. With many freelancers providing ongoing services for a range of companies, sole contractors also feel concerned, finding that they are unable to relax whilst away. Whilst umbrella companies offer the ideal support for contractors, the uncertainty of long-term work keeps many individuals from unwinding fully.

The news comes after Intuit, the accountancy software provider, revealed results of its latest survey. 72% of small business owners worked whilst away, with a seventh admitting they spent less time relaxing than they did working. In addition, 22% of those questioned admitted that their first day back in the office left them more stressed than they had been before going on their break.

With many of these concerns also relating to the freelance market, Inuit revealed that ‘work-cations’ were increasing in prevalence, with individuals going on holiday but taking mobile devices and laptops with them so that they could work whilst away. Managing Director of Intuit UK, Pernille Bruun-Jensen, said “Everybody needs to take time off now and then but our findings show that small business owners never switch off, even when they could really do with switching off. Rather than not taking a break at all, many of them are choosing to take their business away on holiday with them.” With umbrella companies seeing a rising number of people in the freelance field, more people than ever are expected to be indulging in work whilst away.