Crystal Umbrella

PAYE umbrella contractors with expertise in the IT skills market should consider placements with small tech firms, according to one expert who believes they provide exciting opportunities for tekkies.

Ian Hogarth, the Chief Executive Officer of the music website “Songkick,” claims that smaller companies emerging in the technology sector can deliver a stimulating and stable working environment for freelancers specialising in IT contracting. Songkick itself represents one of the success stories for such firms – launched only four years ago, it’s now a thriving enterprise.

But Hogarth’s invitation came with a note of caution: economic circumstances remain extraordinarily difficult for small businesses in particular, and small tech firms have not received sufficient government support at the crucial start-up phase. With government backing, however, he believes they could easily become a highly attractive option for the UK’s best IT talent.

He urged the coalition to do all in its power to assist start-up tech firms to flourish. This would help stop the bigger companies from mopping up all the leading IT talent and help the crucial smaller business sector to drive employment upwards. He said, “We’d like to see the government promote start-ups as a stable, legitimate and exciting option for graduating software engineers.”

Hogarth drew attention to a disturbing fact – even though the UK has some of the finest educational institutions for engineering in the world, most of the country’s top engineering graduates end up joining a management consultancy or a bank. Too many IT graduates think that jobs in software development with a new company are still too risky and they want a more secure option. Adequate government support would dispel this fear, Hogarth believes, and attract talented software engineers – the “lifeblood of tech start-ups” – toward working in new firms.

PAYE umbrella contractors on the lookout for new job opportunities may be encouraged to hear that bankruptcies in the UK have dropped appreciably over the last twelve months.

Commercial bankruptcies fell by 31.3 per cent in the first quarter of 2011 compared to the same period last year, with 12,539 insolvencies being reported in the latest Insolvency Service report. Encouraging though this development is, it hardly invites the popping of champagne corks just yet: the figures reveal a slight increase in the level of bankruptcy reported in the final quarter of last year, which reached 12,028.

The first quarter of 2011 also saw a decrease in the number of personal insolvencies when compared to the same period in 2010 – 30,162 people officially became insolvent between January and March this year, representing a drop of 31.3 per cent on last year’s figures.

Umbrella companies supplying the IT skills market have more reason to be optimistic, however, as Monster UK’s latest monthly index reveals a 30 per cent rise in recruitment in the IT sector. The index showed that there were more vacancies in the technical sector than any other field, resulting in many specialists in IT contracting securing placements with client users.

Monster UK spokesperson Isabelle Ratinaud noted that there was a “persistent upward trend” in the availability of openings in the IT skills market.

Both sets of figures follow hot on the heels of new data from the REC, which last week indicated that the temporary labour market had expanded in size during April – news which is likely to be music to the ears of the jobbing PAYE umbrella contractor.

PAYE umbrella contractors disheartened by recent news of feeble economic growth may support suggestions from a leading small business group.

Last week’s announcement of a distinctly underwhelming growth in GDP – just 0.5 per cent between January and March – hardly amounts to encouraging news for umbrella companies or anyone else seeking new work opportunities.  The insipid rise has spurred the Forum of Private Business (FPB) to call for a “two pronged” economic growth strategy.  The group believes that measures to increase consumer confidence along with urgent new business-friendly policies from government are both required in order to generate a genuine economic recovery.

FPB Chief Executive Phil Orford acknowledged  that the 0.5 per cent increase was “as good as we might have hoped for” and at least suggests that the UK has not slipped back into recession, as many feared.  However, he added, “it doesn’t indicate any great surge of economic activity, and it won’t dramatically increase confidence in the small business sector”.

Mr Orford called for “radical and immediate measures from the Government” if real growth was to be seen in the coming quarter.  Tangible improvements in the conditions for small businesses are needed; he added, especially the need to cut “costly and time-consuming red tape”.  Moreover, he believes the Government should act swiftly to introduce a simpler and more sympathetic tax system and tackle the soaring cost of fuels and utilities without further delay.

Initiatives such as this, Mr Orford continued, will help bring about “the second thing we need to see – a significant increase in business and consumer confidence”.  Maintaining confidence, he insisted, was essential if small businesses are to succeed in driving economic recovery.

His comments were reported in the news site Shout99.

PAYE umbrella contractors working in the IT skills market will be cheered by a new survey produced for the website CWJobs, which reveals that demand for IT professionals rose consistently over the last six quarters.

Commenting on the data, CWJobs’ director, Richard Nott, said that the IT market is “continuing to stabilise,” which is encouraging news for all who make their living through IT contracting. In Q2 and Q3 last year, growth hit 8 per cent and continued rising in Q4, when it reached 5 per cent. 2011 is likely to see continued growth in the sector throughout the year. Even so, Mr Nott cautioned against excessive optimism – the figures are still considerably lower than those seen before the recession hit and a full recovery in the market for IT jobs is still some way off.

The survey coincides with decidedly more gloomy research from GfK NOP, which shows that consumer confidence fell sharply during April, reaching a score of -31 on the index. This is only the third time in the index’s 37 year history that consumer confidence has fallen below -30. The sharpest decline measured was in people’s confidence about their personal finances, which fell to -23 over the last year. It remains negative in outlook for the forthcoming year at -14.

The Managing Director of GfK NOP Social Research, Nick Moon, said that the drop in confidence was bad news for both the government and the economy. The Chancellor’s attempts to spur economic growth in the March budget do not appear to have convinced the public. Mr Moon expressed his concern that, as all five measures of consumer confidence showed a decline, a double dip recession remains a real possibility.

PAYE umbrella contractors working in London’s finance sector will be painfully aware that new placement opportunities have been somewhat thin on the ground for rather a long time; but a new report from the financial services experts Morgan McKinley suggests that the situation is at last beginning to improve. New opportunities are finally appearing for contractors working through umbrella companies in the sector after a protracted recruitment drought.

The jobs market in London’s financial services sector virtually flat-lined throughout 2008 to 2009. But Morgan McKinley’s latest London Employment Monitor hints that some form of economic defibrillation has been at work, with the number of job opportunities in financial services climbing by 11 per cent in March this year.

Not only that, but financial service workers also saw their earnings stabilising after a very turbulent few years. Turbulence in this case usually meant eyewatering decreases. But in March, the decreases seen across the city were marginal, with average takings dropping to $54,445 – a relatively modest three per cent fall which contrasts reassuringly with the more wince-making declines of recent years.

Commenting on the findings, Morgan McKinley’s Chief Operating Officer Andrew Evans said that anecdotal evidence from the company’s clients suggests “a return to a more ‘normal’ recruitment cycle” as the first quarter of 2011 draws to a close. In more economically normal conditions, he explained, it’s usual to see a rise in financial services job opportunities because bonuses would generally already have been paid. Business activity, he went on, appears to have rebounded “after a very stagnant period for the London financial services jobs market in 2008-09.”

Few people would disagree that Bank Holidays and Royal Weddings are occasions for fun and relaxation; but umbrella companies and other businesses will need to be especially prepared this month if cash flow problems are to be averted. That’s according to professional service firm RMS Tenon, which is reminding entrepreneurs and contractors alike that April consist of only 18 working days after Easter and the Royal Wedding bank holidays are taken into account. Cash-strapped businesses in particular should begin tracking down outstanding invoices immediately, as they are likely to be hit the hardest by the breaks.

The company estimates that a significant number of UK workers (around 15 per cent) will simply take the three days between Easter and the Royal Wedding as annual leave, giving them an overall break from work of eleven days. Many parents also tend to take time off over Easter, with the result that the staff limited companies and umbrella companies rely upon to process their remittances might well not be available.

The statistics are unambiguous – every time there is a bank holiday, British businesses lose around £6 billion worth of productivity. And we can expect this to be considerably worse this month with two bank holidays falling so close to one another.

There will, however, be beneficiaries to the holidays, notably in the hotel, restaurants and retail sectors. Demand for their services is bound to soar this month, with around 43 per cent of Brits planning to take a short break away from home to coincide with the Easter break and the wedding. But the bottom line for umbrella companies is – chase those outstanding invoices today.

PAYE umbrella contractors may be amongst those to benefit from the new private sector-led “Start-Up Britain” initiative to support prospective entrepreneurs. Aimed at delivering the best possible support and advice from established entrepreneurs to startup companies, the project is a response to the Government’s call for an “enterprise-led recovery.”

Promising to champion the 270,000 new businesses staring up every year in the UK, Start-Up Britain could help generate new work for freelancers on contractor payroll as small firms adopt the growing trend for flexible workers rather than permanent staff. It has received warm endorsements from Prime Minister David Cameron and the Confederation of British Industry (CBI).

The initiative will provide new entrepreneurs with expert support worth £1,500 and is committed to promoting entrepreneurship within every school in England and creating Enterprise Societies in all UK universities. It has attracted the backing of several major international brands so far, including Virgin Media, Microsoft, Intel, Experian, BlackBerry, Barclays and McKinsey and Co.

Talking to the contractor news outlet Shout 99, Mr Cameron said that there were thousands of people in the UK who were entrepreneurs but just didn’t know it yet. There are, he insisted, “millions of success stories that haven’t been written yet.” He urged people who had been turning over good ideas in their minds for years to seize the opportunities offered by Start-Up Britain and “make it happen” to drive the economy forward.

The CBI’s Head of Enterprise and Innovation, Dr Tim Bradshaw, was equally positive, saying that the initiative could encourage more young people to become “business-savvy.” Providing extra support for entrepreneurs could, he believes, “inspire more people to take the plunge and start a new business.”

Umbrella companies supplying the IT skills market may well have noticed a “huge rise” in demand for contractors with digital skills over the last twelve months, according to a new study.

Recently published research from the freelancer’s marketplace PeoplePerHour.com reveals that while the Government’s public spending austerities have caused a surge in unemployment, the resulting shortage of manpower in the public sector has been offset by a flurry of contractor hiring.

In particular, contractors with digital skills such as search engine optimisation, database development and web design have been very much in demand. PeoplePerHour.com recorded a massive 315 per cent rise in postings for contractors with these skills over the last year.

Xenios Thrasyvoulou, the website’s founder, said that the private sector responded rapidly to the recession by shedding permanent staff and turning to freelancers instead. Thousands of businesses in the UK, he added, quickly understood that the best way to survive the new economic realty was to engage freelancers on time-limited contracts. The decision helped them to “stay lean and remain solvent,” he said.

The public sector, it seems, has taken a leaf from the private sector’s survival book. PeoplePerHour.com’s findings lend support to the PCG’s recent endeavours to encourage refugees from the public sector to consider freelance contracting as an alternative. Contrary to popular belief, the organisation cites evidence that many “ex-bureaucrats” can successfully make the transition from the public sector to the private through contracting. The key obstacle identified by recruiters, the PCG insist, is poor self-belief on the part of ex-public sector employees.

Freelance contractors working through umbrella companies and limited companies are likely to support suggestions from the CBI, urging the Chancellor to make the determined pursuit of economic growth the top priority for his forthcoming Budget.

The employer’s group believes the government should focus on three key areas: dismantling barriers for high-growth firms, boosting domestic investment spending and enhancing export performance.

In its pre-Budget letter to Mr Osborne, the CBI also urged him to make changes to the tax system, arguing that the 50p income tax rate actively discourages the very entrepreneurship the government wishes to promote. Amongst a raft of other measures aimed at assisting medium to larger enterprises, the CBI also wishes the government to cut back on business red tape. This is discouraging many prospective smaller enterprises from even making a start.

CBI Director-General John Cridland said that the March Budget “must demonstrate a relentless focus on growth to get the UK working again.” An “all-action Budget” was urgently required to boost jobs, investment and exports, he added, with swift decisions on investment in the infrastructure playing a key part in the process.

The CBI’s advice follows recommendations made to the Chancellor by the Federation of Small Businesses last week, which called for policies ensuring economic stability. The FSB believes that only under economically stable conditions can smaller businesses develop the confidence to grow and hire more staff. Amongst the measures it advocated was an extension of a further year to the current National Insurance holiday, and providing finance for micro-businesses to take on apprentices.

Umbrella companies may feel the effects of a recent plunge in consumer confidence that could lead businesses to temporarily curtail spending. That’s according to the latest “Expectations and Spending” indices produced by the Nationwide, which recorded consumer activity during January this year.

Robert Gardner, the Nationwide’s Chief Economist, said that consumer confidence in January was not only still “in the doldrums” but heading toward the historic lows last seen in the depths of the recession. The data was gathered at a time when the VAT rate had just risen, and rising fuel and food costs were putting added pressure on already tight household budgets.

These depressing figures coincide with a recent survey produced jointly by the Chartered Institute for Personnel (CIPD) and KPMG, which showed that the recent downturn has hit small businesses in the service sector the hardest. Smaller firms, which include freelancers working through limited companies, saw their turnover drop by 38 per cent. The equivalent figure for medium-sized enterprises was 19 per cent, but larger companies suffered the least with a drop of just 3 per cent.

Growth is still expected in the private sector, but estimates vary as to its strength, with some (such as the CIPD/KPMG analysis) suggesting that it will not be strong enough yet to offset public sector job losses. Local authorities are widely believed to be aiming for a 13 per cent reduction in staffing during Q1, although private firms in manufacturing especially are likely to provide some additional job opportunities. PAYE umbrella contractors should still be able to find roles, but refugees from the public sector looking for permanent posts may find it harder to pick up new work. Gerwent Davis, CIPD’s Public Policy Adviser, suggests that the fragile recovery seen last year will go into reverse temporarily this year.