Crystal Umbrella

International recruitment giant Robert Walters has encouraging news for PAYE umbrella contractors specialising in the London IT skills market: pay rates have risen by 3.4% year-on-year.

The firm’s latest Salary Survey reveals that C# developers have seen their daily rates leap from £400 in 2011 to £500 today. Project managers and senior business analysts have also seen daily rates rise from an average of £450 in 2011 to £500 in 2012.

IT contracting is set to grow even more lucrative if candidates have the requisite skills. In an article for Computer Weekly, Matt Bartley, manager of IT Recruitment at Robert Walters, writes: “The number of infrastructure projects has also increased significantly lately. This has led to demand for information and security specialists as employers seek to ensure their systems are as robust as possible. The move towards cloud computing continues to gather momentum across the market. As VMware is the predominant technology, specialists in this area are particularly in demand.”

Project specialists and developers with expertise in regulatory, statutory and compliance platforms in the financial services sector are very much in demand and, Bartley notes, the business-critical nature of their roles means they are likely to continue to be so throughout the year.

Permanent salaries have remained relatively sluggish, however, growing by just 0.6% year-on-year. Even so, developers with expertise in .Net, C++ and Java can expect salaries of around £90,000 a year in the investment banking sector compared to last year’s £85,000.

Demand for front-end development roles has also remained strong. Contractors with skills in jQuery, CSS, PHP, HTML5 and Drupal continue to enjoy numerous opportunities.

A quarter of the 200 UK employers surveyed in the latest REC JobsOutlook report believe that the forthcoming Olympics will boost their businesses and improve hiring confidence. Just 4% believe that the games will have a negative effect on their prospects.

Skilled contractors working through umbrella companies need not be unduly perturbed at the headline figure for temporary billings. Although more employers plan to hire temporary staff over the next three to twelve months than in the previous survey (up from 26% to 28%), the number intending to cut temporary staff has also risen (from 15% to 19%); however, this conceals a crucial detail of great relevance to PAYE umbrella contractors: core contractor disciplines remain very much in demand.

Employers anticipate increased demand over the next twelve months for candidates (temporary and permanent) with expertise in the IT skills market, the technical and engineering sectors and, especially, in the professional and managerial sector. The report suggests that the latter tops the poll because businesses are “looking to manage the continuing economic challenges.”

Roger Tweedy, director of the REC, said that bad news from the continent was battering employers, who were showing signs of hesitancy as official growth figures remain stubbornly stuck; however, he continued, “there are still reasons to be positive. Consumer confidence is rising slowly, and the impact of that should filter through to businesses in a few months. Barring any terrible shocks from the eurozone and with the potential of a boost to business from the Olympics we could still be on track for slow improvements in job creation as time progresses.”

A modestly encouraging picture has emerged for the jobbing PAYE umbrella IT contractor from specialist recruiters JM Group.

The IT recruiter’s latest quarterly jobs overview suggests that both IT contracting and permanent IT staff billings have risen significantly in the retail banking sector, despite a faltering start to 2012. Compared to this time last year, demand for IT professionals has grown by 10%.

Contractors in this corner of the IT skills market have been in steady demand throughout this period, in fact, as retail banks struggle to make sweeping regulatory changes that require skilled techies for time limited projects. The first credit crunch has led to root-and-branch regulatory changes in the sector, with the result that retail banks have been on the hunt for IT contractors especially.

It is not all good news, however. These same banks also implemented severe cost-cutting measures over the previous year, which has seen a major bulge in the number of IT contractors looking for work in the sector. JM Group’s Retail Index puts the rise at 35% when compared to the same time in 2011.

The knock-on effect of this surge has been a fallback in contractor pay rates, which have shrunk by 12% on average over the last six months; however, the banks continue to offer competitive rates for the most sought-after skills. Developers who can bring classic skills in C++ and Java can expect to command daily rates of around £350 – £550, depending on experience and location.

Permanent IT staff have not seen any change in their salaries and JM thinks there is little prospect of any significant improvement in the foreseeable future.

The powerful House of Commons Public Accounts Committee is preparing to investigate loopholes in the UK’s tax system that, according to its chair, Margaret Hodge, “wouldn’t look out of place in a banana republic.”

Ms Hodge was writing in The Times newspaper, advancing its moral campaign against tax avoidance. Whereas most hardworking contractors who make their livings through umbrella companies or limited companies would not disagree that dodging tax obligations is unacceptable, it may be advisable to maintain a degree of scepticism about the wisdom of this campaign.

Ms Hodge says “thousands of people employed in the public sector are still exploiting a loophole that allows them to lower their tax burden by receiving payment through a company.” Hmm. Thousands of people. This suggests that she is not referring to a small number of wealthy high-earners at the top who may or may not have resorted to questionable measures to lower their tax bills but to smaller fry, such as specialists in IT contracting. The latter may include PAYE umbrella contractors, who certainly cannot be accused of avoiding tax, or to contractors with personal service companies, the vast majority of whom work completely in compliance with HMRC requirements.

The tax abuses by surreally wealthy people referred to by Ms Hodge surely deserve proper investigation and rectification, but if an indiscriminate ‘bash all contractors’ sentiment animates the Public Accounts Committee, serious and unnecessary harm could be inflicted on perfectly honest individuals who are complying fully with the law and paying their dues.

Beware well-meaning politicians with good intentions. There is a certain destination that none of us wish to go to, whose path is paved with the latter.

The public sector has been an inhospitable environment for many jobbing PAYE umbrella contractors under the Government’s austerity regime; however, things are about to get a lot tougher for the bigger beasts in the contractor market, as Cabinet Minister Francis Maude announces stringent new performance criteria designed to dispense with poorly performing primary suppliers.

The industry news source Shout 99 reports that Mr Maude intends to press ahead with proposals to make contracts in the public sector more flexible; those who fail to deliver or who a have accrued blots in their copybooks will be shown the door and politely asked not to return. The initiative does not appear to be related to the Government’s crackdown on the use of public service companies in the public sector, although it does coincide.

In a comment to The Independent newspaper, Mr Maude remarked: “This government will not tolerate poor performance, and this is one of the areas that the next phase will look at. All contracts will have performance criteria written into them.”

£800 million has been saved since the Government’s primary contractors were invited two years ago to reduce their costs, with a thumping £70 million coming from just two sources (software leviathans Microsoft and SAP). Now, primary suppliers will be asked for their feedback on the tough new performance criteria.

Mr Maude may need to tread with caution: if contractors begin to feel that they are being unfairly targeted, they could chose to walk away from the public sector altogether. As we reported last week, this could leave government departments bereft of desperately needed interim management contractors – an own goal rather than an efficiency triumph.

IT contracting in Scotland appears to be thriving, according to the latest Jobs Report from the Bank of Scotland.

Although the REC/KPMG Report on Jobs indicated that the IT skills market suffered an overall fall in demand last month, business demand for PAYE umbrella techies in bonnie Caledonia has entered its third successive month of growth. May’s increase was a little weaker than April’s, but demand nonetheless continued to rise.

More than 100 Scottish employers and recruiters were polled in the survey, with Edinburgh topping the poll for the biggest rise in permanent vacancies. As before, Glasgow emerged as the place to be for interim managers, temps and contractors more generally.

Donald MacRae, the Bank of Scotland’s Chief Economist, said: “The Scottish labour market continued to improve in May but at a lower rate than in the previous month. The number of people appointed to jobs rose while the number of vacancies for both temporary and permanent jobs increased sharply, indicating demand for staff from employers. The Scottish labour market is showing resilience in the face of the global slowdown of 2012.”

Pay rate rises, he noted, were greatest in Edinburgh and Dundee, while Aberdeen was also displaying encouraging trends.

The news coincides with new research from the Chartered Institute for Personnel and Development (CIPD) and Hays Recruitment, which suggests that public sector organisations especially are experiencing a serious shortage of interim managers. Provided the danger of contractor purge can be averted following Government proposals to tax all staff designated as ‘controlling persons’ at source, interim management contractors could find themselves in especially high demand across the UK.

Why did demand for IT contracting take that tumble in May, as recorded in the last REC/KPMG Report on Jobs? Jeff Brooks, who chairs the REC’s Technology Sector Group, believes he has worked out what happened.

In an article for ContractorUK, Mr Brooks reveals the outcome of his consultations with a broad range of REC Technology member companies. It appears that demand in the IT skills market flagged in May because a swathe of major IT projects in the banking and financial sector came to a natural close.

Elsewhere in the economy, firms and organisations are very far from ‘IT shut down mode’. Surprisingly, the public sector (especially health) has recently shown what one specialist recruiter described as “pronounced growth” in its demand for IT contractors. Moreover, freelance project managers are very much in demand in Government departments, a sign that new projects have already had their budgets signed off and are firmly in the pipeline.

Recruiters are becoming increasingly frustrated about the inordinately lengthy lead times for new appointments, however. It is by no means unheard of for permanent candidates to be required to attend six interviews, and temporary workers (including PAYE umbrella contractors) often have to attend three before getting their feet under a desk.

Even so, Mr Brooks found that most IT recruiters are optimistic about the temporary tech-jobs market, in spite of the May blip. Growth may not be stratospheric but it will continue, he believes, as companies continue to invest in technology “to give competitive edge; to reduce costs through consolidation of systems, or to deliver good governance and regulation across the client’s outfit – or often all three.”

As Exaro (the news site that first revealed that Government departments were paying some workers ‘off payroll’) announces that HMRC is about to unleash a wave of investigations on public sector contractors, the Chief Executive Officer of the Association of Professional Staffing Companies (APSCo) launches a trenchant critique of the Government’s approach to the issue.

Writing in ContractorUK, APSCo CEO Ann Swain warns that the proposal to deduct national insurance and tax at source on everyone designated as a ‘controlling person’ will have a profoundly detrimental effect on completely legitimate interim management contractors. The professional staffing sector as a whole will suffer significant “collateral damage”, she insists.

These highly skilled professionals are now likely to be deterred from the public sector by the atmosphere of knee-jerk witch-hunting that has descended over Government departments, despite the fact that they have substantially improved the efficiency of these very departments. A recent IPSOS-MORI poll estimated that the business generated by the interim management sector leapt by 93% over the last five years, suggesting that it plays a most beneficial part in the broader economy too.

Ms Swain writes: “Like us, the Institute of Interim Management also believes that the implication that all senior interims are in some way trying to evade their legal obligations by hiding behind personal service companies is perverse. The institute says that the notion that an independent professional providing business services should be debarred from their professional trade on the basis of their seniority is illogical, not to mention anti-business.”

She also announced that APSCo will be writing to Danny Alexander, the Chief Secretary to the Treasury, to “vociferously oppose” his proposals.

PAYE umbrella contractors with experience in financial services may find new doors opening for them as the UK’s financial sector proceeds with a recruitment drive.

Global recruiter Morgan McKinley has published a new survey that suggests that the London-based financial services sector is on the lookout for new talent. There was a rise of 17% cent in the number of vacant positions on offer during May compared with April’s total. Openings for professionals in the sector during May 2012 were 18% higher than figures recorded for the same month last year, even though the number of people hunting for jobs was 58% lower than May 2011.

Highly skilled contractors working through umbrella companies or limited companies, many of who suffered a bruising experience in the sector recently during its severe cost retrenchment phase, may now find themselves being welcomed back with open arms.

Andrew Evans, Morgan McKinley’s chief operations officer, said that workers in the sector are showing appreciably increased confidence about their long-term career prospects. Almost half (49%) of those polled were optimistic about finding new work opportunities, while 42% said that they were content to remain in their current roles. Just 6% believed that their only realistic option for finding new opportunities was to seek them abroad. One in three respondents were optimistic that as the financial services market improves, so bonus payments will rise – and generously.

Should these indicators of renewed confidence become materialised in a re-invigorated financial sector, permanent and contractor roles alike are not only likely to be on the rise but also handsomely remunerated.

A new report from Gartner suggests that, for specialists in IT contracting at least, keeping one’s head in the clouds is set to become a most lucrative strategy.

The cloud in question, of course, refers to new generation computer infrastructure rather than to the cumulonimbus variety. At the recent 2012 Gartner IT Infrastructure & Operations Management Summit in Frankfurt, Germany, the firm forecast that 5% of all virtual machines on the planet would be run on cloud-based Infrastructure as a Service (IaaS) systems by 2015. This is certain to lead to a surge in demand for contractors in the IT skills market who have experience with cloud technology.

Contractors with expertise in the mobile app market will also find themselves being headhunted: Gartner believes that downloads from stores will hit 31 billion by the end of 2012. The firm notes that both consumer and business users download from app stores, making it difficult to determine exactly how many business apps versus consumer apps are in demand; however, in demand they all certainly are.

The cloud is facilitating the management of vast volumes of data, according to Gartner’s vice-president Milind Govekar, with the result that Software as a Service (SaaS) management providers have to deal with unprecedented quantities of data: the age of ‘big data’ is here, and again, IT expertise will be needed to ensure it is handled properly.

Gartner’s report follows the latest Report on Jobs from the REC and KPMG, which showed that, despite a dip in May due to exceedingly challenging economic conditions, demand for PAYE umbrella techies remains healthy. If Gartner’s forecast proves accurate, it is set to grow even healthier.