Crystal Umbrella

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.

The NHS is seeking highly skilled specialists in IT contracting working through umbrella companies, according to data from the international recruitment firm Badenoch and Clark.

Contractors in the IT skills market who have knowledge of NHS data systems and SQL server business intelligence are experiencing increased demand for their services, figures contained in Badenoch and Clark’s latest Talent Spotlight reveal. The company’s Operations Director, Mark Gascoigne, says that NHS Trusts based in Birmingham are creating new NHS datasets and are on the lookout for skilled information analysts as a result. The health service needs to develop more robust data warehouse solutions and business intelligence, Mr Gascoigne explained, both of which are driving demand for IT contractors.

In London, numerous NHS Trusts are attempting to complete major projects and are seeking data migration professionals, especially those with testing and training experience in RiO and Cerbner, he added.

Outsourced work for IT professionals may also be more generally on the rise. Technology sector analyst Ovum claims that the utilities sector, which is known to be squeezed for cash, is reluctantly outsourcing IT work in a bid to keep the long-term costs associated with permanent positions to a minimum. Hiring PAYE umbrella contractors and other skilled freelancers is about the only option they have to keep permanent headcounts to a minimum.

The rise in outsourced work is hardly a tidal wave – Ovum’s Principal Analyst Stuart Ravens described it as small but significant – but it is a trend he believes will increase over the coming year. Utilities companies are beginning to realise that outsourcing must be given serious consideration.

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 working in the financial services sector may draw some cheer from new research released by the specialist recruitment company Marks Sattin. Salaries amongst financial services professionals rose by 8 per cent during 2010 and are predicted to rise by 13.5 per cent this year, the figures suggest.

Dave Way, Managing Director of Marks Sattin, said that the recession had suppressed salary increases last year as employers sought to restore their margins. If similar trends continue into 2011, he explained, salaries may only rise by a similar amount (8.5 per cent) but there are signs of optimism amongst professionals in the sector that business will pick up. Mr Way added a cautionary note, however, and suggested that hopes for salary rises of 13.5 per cent be “over optimistic.”

Contractors used to working in temporary placements through their umbrella companies may be heartened by the study’s finding that pay rates for temporary staff in financial services remained higher than those for permanent staff and freelancers on long-term contracts.

The Marks Sattins study contrasts somewhat with new figures from Powerchex, which reveal that the two 4-day weekends in April resulted in a sharp decline in recruitment in financial services. Investment banking jobs declined by 30 per cent during the month and there was less recruitment activity in hedge funds and stockbroking. Even so, recruitment for investment banking countered the general trend by rising 19 per cent above the previous month. IT contracting, though, has undergone something of a recruitment bonanza, with 75 per cent more vacancies in the IT skills market compared to the same time in 2010. Companies seeking improved data security accounted for much of this growth.

Umbrella companies supplying contractors to the IT skills market may find themselves moving into the retail sector in the light of new figures from the recruitment firm ReThink Recruitment.  Demand for IT professionals has soared in the sector, more than doubling in the space of a year: ReThink received 218 requests for candidates with IT skills in the fourth quarter of 2009 but this had leapt to 564 by the same quarter of 2010.

Iain Blair, ReThink Recruitment’s Director, attributes the rise to increasing retail competition in providing mobile, multi-channel online and home delivery customer services.  This has not only increased demand for IT professionals but has also pushed up their pay rates, he observed, adding that IT specialists with e-commerce experience “are now commanding up to a 24% pay premium over colleagues in equivalent roles in other sectors”.

By way of comparison, programme managers in other industry sectors can secure pay rates of around £685 per day at present; in retail, by contrast, programme managers with e-commerce experience can expect to be paid £850 per day.  Project managers and business analysts can also command similar pay rates in the retail sector, ReThink Recruitment believes.  Blair was forthright in his assessment, declaring that “E-commerce and financial sector IT skills command the highest salaries.”

Retailers such as Morrisons, Waitrose, and John Lewis have driven the demand for IT skills as they seek to expand their home delivery services.  In addition, there may be even greater demand for IT skills in the sector – according to a report by Martec, 19 per cent of retailers intend to replace their e-commerce platforms over the next twelve months and a further 5% are planning to acquire an e-commerce platform for the first time.

PAYE umbrella contractors working in the IT skills market will be well aware that cloud computing technology is on the rise but, according to a leading security expert, it may also pose a “huge risk” for some businesses.

Hewlett-Packard’s Senior Director of Products, Application Lifecycle Management Software, Subbu Iyer, was speaking after the release of a report from the EU which endorsed cloud computing enthusiastically, highlighting its potential cost savings and the revenues associated with the technology. But Mr Iyer points out that many small firms who may be considering the technology are unlikely to have a security information team, a deficit which could expose them to significant security risks.

IT contracting may see something of a surge in demand as a result, as increasing numbers of firms seek to benefit from the cloud’s advantages. But My Iyer was at pains to highlight the “substantial risks” faced by newcomers to the technology, adding that security, availability and performance are regularly cited as the top three concerns inhibiting the wider uptake of cloud computing.

Number one on the list, Mr Iyer noted, was security. “It’s a huge concern,” he added. If companies are moving a critical business process completely onto the cloud, he continued, “the first area that chief information officers are concerned with is, ‘Is it secure?’”

Iyer believes that security concerns are playing a major role in both cloud technology and mobile computing – both of them central to the new economy. “There are a lot of applications being purpose built for mobile phones,” he noted. “How do you ensure that those are secure?”

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.

Umbrella companies and other employers will be required to automatically enrol their staff in a pensions scheme from October 2012 under new Government legislation. Even firms employing temporary workers for over 12 weeks will be obliged to adopt the same rule.

The Recruitment and Employment Confederation (REC) and National Employment Savings Trust (NEST) will attempt to clarify any confusion about the new rules in a workshop on May 17^th, which is free to all REC members. The organisation’s Head of Policy, Gillian Econopouly, billed the workshop as “an excellent opportunity” for members to understand what the new auto-enrolment reforms mean for them.

A major challenge that recruitment agencies may face when the legislation comes into force will be “churn:” around a million temporary workers are engaged on assignments at any one time in the UK, many of whom frequently change not only assignments but, on occasions, recruitment agencies in the normal course of events.

PAYE umbrella contractors whose company uses the same recruitment agency to find successive placements may be less affected by the reform, but large numbers of temporary workers are expected to want to opt out after their recruitment agency has enrolled them – a process which will be exceptionally time-consuming for recruiters who will find themselves constantly enrolling and un-enrolling staff. The REC has submitted its response to the Department of Work and Pensions consultation concerning the reform, warning that the additional bureaucracy will draw recruitment consultants away from their primary task of helping candidates find work opportunities.