Crystal Umbrella

PAYE umbrella contractors working north of the border face a potentially worrying time in the near future with Scottish Referendum Bill scheduled for Autumn 2014; however, a leading Scottish politician has reassured delegates from the PCG that Scotland has no intention of turning its back on the country’s contracting community.

The Scottish Energy, Enterprise and Tourism Minister in the SNP Cabinet, Fergus Ewing MSP, recently met with leading members of the PCG in Edinburgh, who sought answers about the fate of Scottish contractors working through umbrella companies or limited companies as the prospect of Scottish Independence looms. In particular, PCG representatives were keen to seek assurances that contractors would not be disadvantaged, whichever way the referendum result goes.

Mr Ewing appeared keen to understand the barriers faced by contractors in Scotland and made it clear that he wished them to feel free to sell their services and run their businesses. He recognised that working as a lone contractor can sometimes lead to feelings of isolation, but he was emphatic that the Scottish economy welcomed self-employed people.

The PCG delegates, headed by leading members Simon McVicker (Head of Public Affairs) and Gary Sharp, also met with shadow ministers from the other Holyrood parties and raised similar concerns with them. Labour MSP Ken Macintosh, the Shadow Minister for Enterprise, expressed an interest in face-to-face meetings with Scottish PCG members, which the organisation plans to organise later in 2012.

Those who earn their daily bread through contracting can, it seems, derive some comfort from the fact that, whatever the referendum result, leading politicians are not being permitted to ignore the needs of the Scottish contracting community.

Anxious PAYE umbrella contractors disappointed by the news from the Office for National Statistics that the UK has taken its second dip into recession may be heartened by the latest JobsOutlook report from the Recruitment and Employment Confederation, which suggests that the underlying picture is not as bad as the headline news might suggest.

While the contraction in the construction industry was largely responsible for the overall negative growth recorded in Q1 2012, during the same period employer confidence elsewhere actually grew to its highest point since March 2009, the REC report reveals.

The quarter was not without its wobbles. Although employer confidence rose between February and March, it did so less vigorously than between January and February. Even so, 44% plan to maintain current levels of agency workers (which include skilled contractors working through umbrella companies) and 34% intend to increase temporary staff in the coming quarter. 29% plan to do so over the next year.

Permanent roles are also on the rise: 72% of employers said that they would be recruiting permies over the next quarter and 69% plan to do so in the next twelve months.

Roger Tweedy, REC Director of Research, said: “The overall figures from quarter one are really positive. Looking forward, employers tell us they plan to make more job offers over both the short and medium term – particularly for permanent roles. Our measure of employer confidence has reached a record high point. But the growth in confidence was less than last month so it will be important to track whether increasing employer confidence is a continuing trend or whether it’s peaking.”

Hardworking PAYE umbrella contractors seeking appropriate work placements may well be getting let down by recruiters, a new survey by a nationwide HR company suggests.

The Curve Group polled 50 leading firms throughout the UK and found that over three-quarters were dissatisfied with the service recruitment firms supposedly specialising in contractors had delivered. 75% of the firms surveyed were looking for skilled temporary staff to work on specific projects on a time-limited basis, a need that propelled them in the direction of specialist contractor recruitment companies.

Unfortunately, that is when things turned sour. 78% of the firms said the recruiters did not understand their business needs, half were sent unsuitable CVs of poor quality, and 25% considered their experiences ‘dreadful’.

Jobbing contractors working though umbrella companies were equally unimpressed: half felt they had received a ‘poor’ service while 10% rated it as ‘dreadful’.

Contractors complained about unreturned phone calls, poor communication from the recruiter after placement, inadequate to non-existent feedback following interview, and extensive ignorance about their skills and the way they work.

One of the report’s authors, Lyndsey Simpson, said: “These comments and statistics reveal a serious disconnect between contractor agencies and their clients, yet with recruitment freezes in nearly every sector companies are increasingly having to rely upon contractors.”

The irony here is that a huge 89% of the companies polled had stopped recruiting permanent staff, assuming that hiring the right contractors would be rather like shooting fish in a barrel. For PAYE umbrella contractors, the moral of the story is simple: choose your recruiter wisely.

PAYE umbrella contractors with a fondness for the Emerald Isle may be tempted to move to Cork after computer giant Apple announced a major expansion to its European headquarters in the city.

Apple currently employs 2,800 staff at its Hollyhill HQ, a number that will rise by a further 500 over the next 18 months. The company has been in negotiation for several months about the project with Ireland’s Minister for Jobs, Richard Bruton, along with department officials and IDA Ireland.

Mr Bruton said: “The announcement that Apple, one of the world’s leading companies, is expanding its operations in Ireland and creating 500 new jobs is a huge boost for the country. It is a great testament to the company’s workforce, a great vote of confidence in the future of our economy, and it shows what is possible for Ireland at the heart of a stable Europe.”

IT contracting opportunities are likely to be amongst the new jobs on offer as staffing for online services and technical support is set to grow. The Hollyhill plant, which is located in the north of the city, became the company’s first non-US base when it was built in 1980, and has already seen expansion in the recent past thanks to the soaring popularity of the iPod and Apple’s spectacular resurgence in the PC market.

The plant has not been without its ups and downs: 450 jobs were shed at the close of the 90s, prompting some pundits to forecast that the firm was downsizing in Ireland. Today, however, the story is completely different, with Hollyhill playing a pivotal role in Apple’s European, Middle Eastern and African supply chains.

Contractors in the IT skills market with experience of web design are likely to be eagerly sought after following new research from KPMG, which reveals that a staggering 95% of UK organisations with websites are not ready for new EU data protection rules, despite the fact that the implementation deadline is fast approaching.

Even after a 12-month deferment on the cookie requirements of the new rules, a majority of British firms are still not ready. This places them in the firing line for harsh penalties, which can be as high as £500,000. Websites must now clearly ask visitors for permission to monitor their online habits.

KPMG partner Stephen Boner explained that the new regulations would be enforced in the UK as from 26^th May, but that the vast majority of British organisations still have much work to do to ensure compliance. Only one organisation included in the study had so far got around to asking online visitors to opt-in to its cookie policy. This is the central plank of the EU Directive on Privacy and Electronic Communications, and it is more than a little worrying that so many companies have done so little about it.

Although some sites pepper their visitors with thousands of cookies, the majority use between five and ten – but that is enough to attract a nasty kick in the financial nether regions if permission is not expressly sought.

Mr Boner urged companies to waste no further time in analysing their cookies and drawing up plans to ensure their usage complies with the directive. PAYE umbrella techies stand by: you might find your phones ringing continuously over the new few weeks.

Contractors working through umbrella companies in the world of IT contracting could find a surfeit of new opportunities opening up, thanks to new private sector funding for emerging firms specialising in software-as-a-service (SaaS) and cloud computing.

The additional money – all £62.9 million of it – will come from the country’s largest Enterprise Capital Fund, Notion Capital, and will be targeted at creating jobs, including contractor roles.

Government ministers, who are backing the cash injection to help these firms expand and recruit new staff, say that substantial commitments from government, private investors and the European Investment Fund has made it possible. Mark Prisk, the Business and Enterprise Minister, said:

“It is absolutely vital that ambitious small firms can access the finance they need to expand and grow, and this new Enterprise Capital Fund will provide at least £40 million of funding to viable UK high-tech businesses. Notion Capital is the largest Enterprise Capital Fund to date and will help a significant number of firms to grow and create jobs, boosting our economy.”

This may just be the beginning: the Government plans to distribute a total of £200 million through the Enterprise Capital Fund programme over the four years to 2014-15.

Capital for Enterprise Limited’s CEO, Rory Earley, said that his organisation was “very impressed” with the Notion Capital team’s extensive operational and entrepreneurial experience, which they deploy to enhance the businesses they invest in.

Meanwhile, IT contractors in Scotland may want to turn their attention to Edinburgh, where cloud computing firm enStratus has confirmed that it will opening an office by 2014 and will need 30 highly skilled IT staff to run it.

Techies working through umbrella companies in the IT skills market may wish to brush up on their knowledge of the cloud if they want a steady flow of well-paid work in the future. So says the business analysis group Gartner, anyway.

According to Gartner, cloud computing is on the rise across the world and now represents new generation technology. Ominously, the group warns that unless IT departments keep abreast of developments, they are likely to become as defunct as the proverbial dodo. The way forward, Gartner suggests, is for IT departments to start functioning as cloud brokers, working as intermediaries while their companies make the transition to cloud systems.

Last year cloud brokerage gathered momentum as a model and the group believes it is bound to accelerate over the coming five years. It requires IT heads to create purchasing strategies aimed at cloud adoption and to encourage other departments within a company to approach IT experts whenever they require support and advice. Enter the trusty IT contractor with well-honed skills in cloud computing.

There is plenty of work to be done, as it happens. Gartner’s Research Vice President, David Mitchell Smith, believes that transferring current operations to cloud systems is only the first step. Firms will also need to develop special applications suited to the new cloud environment if they want to get the best out of the new environment.

The moral of the story for specialists in IT contracting? You will remain very much in demand if you evolve your skills to keep up with the latest in cloud technology.

Specialists in IT contracting enjoyed strong demand in January and February this year, but new data from the REC suggests that the hiring spree is cooling off.

In March, demand for contractors specialising in the IT skills market dropped to 52.5, a small but detectable fall-back from February’s score of 53.9 (the highest score in six months). In March 2011, IT contractors had topped the poll of most sought after temporary candidates, reaching a score of 63.8. They have now slipped into third place out of seven categories, narrowly missing second place, which went to freelance engineers.

However, PAYE umbrella techies need not feel personally affronted: the latest REC/KPMG Report on Jobs suggests contract billings in toto fell last month at a rate faster than that seen for over two and a half years. Demand for permanent IT experts remained strong, especially in areas such as CAM, CAD and development skills where there are full-time shortages.

The REC’s member agents believe that the slight depression in temporary contractor billings can be attributed to the cumulative effects of the Agency Workers Regulations. Recruiters for contractor and permanent staff frequently reported that hirers have responded to the AWR by converting formerly temporary roles into permanent ones.

Acknowledging the slight decline in temporary appointments, the REC’s Director of Policy and Professional Services, Tom Hadley, said:

“This may in part be linked to employer uncertainty over the Agency Worker Regulations, although it could mainly be due to the fact that increasing business confidence has resulted in more employers being prepared to take on permanent hires rather than temporary or contract staff.”

Further details are emerging about the ongoing effects of the AWR on the flexible workforce, with many PAYE umbrella contractors remaining concerned about the potential negative impact on their prospects.

A survey of 140 companies by international law firm Eversheds reveals that most have seen labour costs rise. The majority report costs climbing by up to 10%, but a minority have experienced more eye-watering hikes of 25%. A small number have seen a shocking 50% increase.

Most companies have adopted strategies to minimise increased costs, however, by cannily adopting exclusions to the regulations. By far the most widely used exclusion is the so-called ‘Swedish derogation model’, which permits the hiring of temporary staff on permanent contracts: effectively, the agency pays such workers a minimum rate between assignments, which prevents them from claiming the ‘equal measures’ entitlements after twelve weeks.

Meanwhile, the REC is continuing to monitor the AWR. The latest data suggests that the regulations are indeed creating significant bureaucracy and costs for recruiters, but demand for highly skilled contractors working through umbrella companies remains strong, as does that for other temporary workers. The vast majority of employers polled in the REC’s JobsOutlook report are planning to increase or maintain their temporary workforce in both the short- and long-term.

Tom Hadley, Director of Policy and Professional Services at the REC, said:

“The overall demand for temporary and contract staff has remained strong overall despite a slight blip in some sectors. Looking ahead, a key priority is to continue actively promoting the benefits of temporary and contract work through ongoing research and initiatives such as the Flexible Work Commission”.

It is no secret that PAYE umbrella techies specialising in IT contracting have taken a drubbing in the financial services sector of late, with many leading firms imposing tough ‘take it or leave it’ pay rate cuts. This could all be about to change, according to new research from PricewaterhouseCoopers and the Confederation of British Industry.

The sector has just been through its eighth consecutive quarter of growth, with the latest one (Q1 of 2012) being appreciably above average. Jobbing contractors working through umbrella companies in the sector may be heartened to find that hiring activity rose unexpectedly at the start of 2012, with 19% of financial services companies hiring new staff.

A further encouraging sign is that, for the first time in twelve months, optimism in the sector has actually risen. The research also suggests that most of the firms are planning investment in new technology over the coming year, news which should gladden the hearts of IT contractors who have been through such bruising experiences in the sector recently.

Ian McCafferty, the CBI’s Chief Economic Adviser, attributed the welcome developments to receding concerns about the eurozone crisis, with the result that business optimism and investment intentions have improved. Even so, McCafferty cautioned, business levels have not yet returned to normal levels and the sector still faces challenging economic conditions. Nonetheless, for the first time in a long while, recovery in the sector is now on a firm footing, he added.

The news appears in sharp contrast to a recent assessment by the OECD, which predicted that the UK would slide back into recession in the first quarter of 2012.