Crystal Umbrella

New research reported in Shout 99 confirms that growing numbers of PAYE umbrella contractors specialising in the IT skills market are moving into the telecoms sector.

The study by giant group plc reveals a 43% leap in the number of contractors opting for telecoms jobs over the last twelve months, largely in response to demand from retailers as they pump more investment into mobile internet marketing. This represents a rise in the proportion of IT contractors working in telecoms from the 12% recorded last year to 17%this year.

High street retailers have been badly bludgeoned by the economic downturn and are developing m-commerce platforms vigorously in an attempt to revive their fortunes, as more consumers shift their purchasing habits away from bricks-and-mortar shops towards their online equivalents, the study suggests.

The total spend on internet purchases reached £7.9 billion in December 2011, representing a rise of 16.5% on the figure for the previous Christmas. Many of these online purchases are made using smartphones and tablets, hence the new investment in m-commerce platforms.

The MD of giant group, Matthew Brown, said:

“Ironically, despite some retailers struggling, retail is one of the few sectors which increased its use of IT skills over the past year. Compared to the banking sector, retailers have never been particularly intense users of IT skills, but that is changing fast as retailers channel investment into m-commerce platforms.”

“A surprising number of retailers don’t offer e-commerce functionality. With consumers becoming more demanding about how they shop, and legacy systems often a serious bottleneck, investment in IT is key to gaining competitive advantage.”

PAYE umbrella contractors with skills in the oil and gas industry are likely to be cheered by the latest Oil and Gas Salary Guide, which polled more than 14,000 workers in the industry. After a difficult year in 2011, the oil and gas industry appears to be springing back into rude health.

The Salary Guide for 2012 was produced by the Oil and Gas Job Search website and recruiters Hays Oil & Gas. Salaried workers and contractors working through umbrella companies or limited companies have all seen significant improvements in pay rates. Full-time oil professionals in the UK can now expect to command salaries of £55,850 per annum – well over twice the national average of £26,244.

Imported labour, too, has also enjoyed a pay hike: expat workers can expect salaries of £51,850 per year, an impressive rise of 6.8% on last year. Given that many in the UK workforce are facing pay freezes and even pay cuts, this clearly isn’t to be scoffed at.

Some of the most impressive pay rates have gone to contractors – those of them that work in the North Sea, anyway (that vast area includes Scandinavia and the Netherlands as well as the UK). The most experienced and skilled engineers and managers are taking home average daily rates of £540 per day. Contractors at director level are doing especially well, regularly attracting daily rates of £900.

Hays Oil & Gas Managing Director Matt Underhill commented on the recovery, which began in 2011.

“The figures from the 2012 guide demonstrate that the UK oil and gas industry has maintained this recovery and day rates remain buoyant.”

A study from the global management consulting firm Boston Consulting Group (BCG) makes for very happy reading for specialists in IT contracting. The research forecasts a massive proliferation in the use of internet-enabled mobile devices, which will double the value of the G20’s web economy by 2016.

The value of that economy is set to rise from its present £1.5 trillion to £2.7 trillion over the next four years. If this proves accurate, you can be sure that demand for PAYE umbrella contractors and other techies working in the IT skills market will soar.

By 2016, the report suggests, the number of people using the internet will rise to 3 billion – that’s almost half of the world’s population. However, they won’t be surfing on a desktop PC anchored to a desk with a copper wire internet connection. They will be using smartphones, which have dropped dramatically in price in recent years, as well as many other internet-enabled gadgets. The study suggests that internet access will no longer be considered a luxury and that 80% of the world’s web surfers will be using a mobile to access the web.

The expansion of digital technologies has major implications for how to run a business because many more products are going to be connected to the web, including cars, sensors and even radiators. Digital can no longer be seen as an added extra but will form the core of new business models, driving companies to adapt their processes, structures and people for survival in the digital economy.

BCG spokesman Paul Zwillenberg notes that digital businesses are already outperforming those that have not embraced the web economy.

HMRC has just announced a mild analgesic for the tax return migraine that many will suffer this year.

Busy contractors working through their own limited companies have an additional headache at this time of year with HMRC’s self-assessment tax return deadline due to slam into place. It is tomorrow, of course, which means that, as with every year, there will be a frantic flurry of last minute online filing as 600,000 contractors and other self-assessors scramble to get their self-assessments in the bag before the guillotine drops and hefty £100 penalties come into force.

This year is different in one important respect: if you are one of the 90,000 people who have a query about tax liability, you are going to find it virtually impossible to get through to the HMRC helpline, thanks to a strike by the PCS union which will see call centre staff drop by 80%.

Thankfully, HMRC has decided to effectively extend the deadline to 2nd February. Previously, the Revenue had insisted that the 31st January deadline would remain in place, although automatic fines would be waived for those unable to get through to the strike-hobbled call centre.

Rather than getting buried beneath an avalanche of complaints, our venerable tax collectors have decided that it would be more pragmatic to make a blanket extension to the deadline after all. Stephen Banyard, the Acting Director General for Personal Tax at HMRC, said:

“We’ve always been very clear that we want the returns – not the penalties. For that reason, we don’t want anyone who can’t get through for help and advice on 31st January to be disadvantaged in any way.”

Jobbing PAYE umbrella contactors may be interested in the REC’s latest JobsOutlook report, which reveals a “marked dip” in hiring intentions vis-à-vis permanent posts.

The REC’s monthly survey is based on the responses of 600 UK employers. The number of employers planning to increase their permanent workforce fell from 65% to 63% over the month, while 31% plan to maintain current staffing levels.

The finding, which is likely to be of most interest to placement-hunting contractors working through umbrella companies or limited companies, concerns demand for temporary staff. As we reported here recently, the good news is that this appears to be strong despite the passing of the first AWR equal entitlement deadline over the Christmas period.

Many had feared that firms would start purging their workplaces of temporary staff of all kinds in January as a result of the AWR but, so far at least, there is no evidence of this. 27% of employers intend to expand their temporary staff and a further 57% plan to maintain temporary staffing at current levels, making a total of 84% who have no plans to cut agency staff.

REC Director of Research Roger Tweedy said that the rise in employer caution is attributable to the continuing sovereign debt crisis in the Eurozone. He added:

“The outlook for temporary staff remains encouraging despite the Agency Worker Regulations (AWR) now being in force. … [T]he vast majority of businesses plan to maintain or increase their use of temporary staff which indicates that flexible working options will continue to provide an important outlet for employers and job-seekers.”

Contractors working through umbrella companies can avoid delays in starting new placements by taking health and safety training before their contracts begin, the firm HSE Passport advises.

The company, as its name suggests, provides PAYE umbrella contractors with a recognised HSE ‘passport’ which shows recruiters and employers that up-to-date training in health and safety legislation and practises has been completed. This spares them hours of compulsory in-house safety training before starting new placements and enables them to ‘hit the ground running’, getting stuck in to the work they were hired to do from day one.

HSE Passport’s General Manager, Guy Schrecker, confirmed that employers would recognise his firm’s passport card as proof that the contractor is ‘health and safety-ready’ and does not need to undergo any safety induction training before beginning the placement. The passports are portable and can be carried by the contractor from project to project, he added.

Mr Schrecker believes that recruiters should now make them compulsory. The benefits to clients are obvious – they save valuable time and money. Many umbrella service contractors may soon find themselves beginning an HSE passport training course if recruiters take up Mr Shrecker’s advice.

Although many of them might at first balk at the idea of compulsion, there are clear advantages to contractors, as well as employers, not least because they open the door to immediate starts when contracts are secured. If an HSE passport makes it quicker to begin working (and getting paid), it seems altogether less objectionable to be required to have one.

Despite early forebodings about the possible negative impact of the Agency Workers Regulations on PAYE umbrella contractors, the latest evidence from the Recruitment and Employment Confederation suggests that demand for contractors and other temps remains strong.

Amidst reports that January might see tens of thousands of contractors who work through umbrella companies out of work, the REC/KPMG Report on Jobs has recorded only a minor dip in temporary billings during the month, which it believes is more attributable to general economic conditions than to the AWR.

Moreover, the vast majority of employers (87%) are planning to maintain or increase their temporary staff over the next 12 months, the REC’s AWR Monitor reveals. Only 13% said that they anticipated reducing their use of temporary workers. Although the AWR’s ‘equal treatment’ entitlements kicked in over Christmas, there was no flurry of queries or requests for information from workers.

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

“It is now over 100 days since the AWR came into force. Despite the slight dip in the number of placements highlighted in last month’s Report on Jobs, overall demand remains strong. Temporary and contract staff will continue to provide employers with a key means of bringing in the right skills at the right time.”

He added “There is no doubt that the regulations have created significant cost and resourcing implications for the industry but the priority has been to reassure client organisations over the ongoing viability and benefits of using agency staff.”

Intrepid contractors working through umbrella companies may consider a move north of the border if they specialise in IT skills market, following the latest Bank of Scotland Report on Jobs.

The Bank’s report for December reveals that temp and contractor demand remained in surprisingly good health, with billings slipping by a mere gnat’s whisker into contraction during the month. Aberdeen, especially, demonstrated vigorous strong buoyancy, with higher pay rates and higher contract billings – a sign, most likely, that offshore gas and oil renewables-led industries from the UK have successfully ramped up their prospects and are hiring contractors with gusto.

Specialists in IT contracting also have reasons to be cheerful, to recycle an already coined phrase. The Scottish IT sector is, frankly, outperforming that of the UK as a whole, with demand for IT and computing leading Bonnie Caledonia’s contractor and temp league tables. In fact, in December the sector registered an amazing index of 62. Anything over 50 represents growth; if 50 – 55 represents a gentle trot, above 60 means not a canter but a healthy gallop.

To get some perspective on the figure, just compare with the REC/KPMG’s comparable figure for the IT sector in the UK as a whole in their latest jointly commissioned latest Report on Jobs. That recorded an index of 51.4 – by no means a standstill but barely an amble. The Scottish figure is more than ten points higher.

Even so, the Bank of Scotland’s Chief Economist, Donald MacRae, remained true to his country’s reputation for dour outlooks. He said “The Scottish economy is struggling to maintain growth momentum in the face of the global slowdown.”

PAYE umbrella contractors seeking new opportunities in the IT skills market in 2012 may be in for a good year, with the giant IT firm Hewlett-Packard promising to share its public sector work with small businesses and accountancy leviathan Deloitte forecasting an expansion in ‘big data’ projects over the next twelve months.

Hewlett-Packard is currently the government’s biggest IT contractor and has announced that it will increase the number of SMEs in its supply chain from 10% to 15%. Techies working through umbrella companies are likely to be amongst those to benefit from the expansion in sub-contracting by the IT giant.

By making this move, which should see the 600 small firms and individual contractors currently used by HP rise by a further 150, the company is endorsing the government’s efforts to help smaller firms generate desperately needed economic growth.

Accountancy firm Deloitte also had some encouraging news for the jobbing IT contractor with its forecast that large firms will launch ‘big data’ projects worth between £650 million and £1 billion in 2012. Given the economic conditions in which these projects are to be embarked upon, it is not unreasonable to suppose that many of these companies will seek to keep permanent headcounts down by hiring skilled contractors to bring them to fruition.

Deloitte’s global lead for technology, media and telecoms, Jolyon Barker, said:

“So-called ‘big data’ projects had a total industry revenue of only £65 million in 2009.However, 2012 will see 90% of Fortune 500 companies kick off a data-related initiative, which will boost the industry’s revenue to between £650 million and £1 billion.”

Anxieties have been proliferating in numerous Tweets, blogs and even news posts that a general anti-avoidance rule (GAAR), which George Osborne may include in the March Budget, will be added to IR35 to police contractor employment status. However, according to a number of experts, the fears are totally unfounded.

John Whiting, the director of the Chartered Institute of Taxation (CIOT), told Contractor UK “I do not think contractors need to worry about the GAAR when it comes to employment status unless they are using some very artificial structure.”

He added “We are likely to see the GAAR concept taken forward in the coming Budget… [but] I cannot see that it would be used to target, for example, the simple issue of deciding to work through a company. Similarly, I don’t see that a GAAR would police employment status as such – surely case law will continue to do that.”

PAYE umbrella contractors and most freelancers who work through limited companies will be unaffected by the rule, according to Paul Mason, contracts manager at the specialist IR35 compliance company Abbey Tax, “unless they are looking at the offshore trust-type of arrangements.”

The rule has been proposed for inclusion in the March Budget after an extensive study by Graham Aaronson QC. John Whiting went on to explain that the aim of the proposal was to target and deter contrived schemes using “a very artificial structure”; contractors who decide to work through a company will not, he believes, be caught up in it. There are, he added, “a myriad of rules, IR35 and MSC in particular, that police that area.”