Umbrella company contractors working in the financial services sector could see more demand for their services after PricewaterhouseCoopers and the CBI announced that the sector was still growing.

The industry has now witnessed growth for eight consecutive quarters and the rate of growth in the first quarter of 2012 was above average. There was also an unexpected increase in hiring activity as 19% of financial services firms took on new staff after the turn of the year. Optimism in the sector has now increased for the first time in twelve months.

IT contractors also look well placed to benefit from additional opportunities as organisations look to increase their investment in new technology over the coming 12 months.

The chief economic adviser at the CBI, Ian McCafferty, said the recovery in the financial services sector was now on a firmer footing. Concerns over the problems in the Eurozone seem to have receded and business optimism and investment intentions have improved.

However, financial firms still face challenging conditions as business levels have still not recovered to normal levels.

UK corporates are displaying increased levels of confidence, but they are still holding back when it comes to increasing their spending, according to Deloitte.

The economic picture is blurred at the moment with the OECD predicting that the UK economy would fall back into recession in Q1, whilst other analysts predict economic growth in the first three months of 2012.

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A new study by ReThink Recruitment suggests that IT contractors will soon need to work harder for their money.

Almost 90% of IT directors are expecting to see workloads increase but only 39% expect their budget to increase accordingly. This will be the third consecutive year when workloads outstrip budget increases and this has led directors to worry that they will be unable to deliver business-critical projects.

Michael Bennett, a director at ReThink, explained that organisations are focusing on their balance sheet and expecting wider productivity gains for less expenditure and this is piling an increasing amount of stress on everybody who works in IT. Contractors now have to work extra hours in order to meet unrealistic deadlines, but they are not receiving any additional money for doing so.

ReThink surveyed IT directors with at least 250 members of staff and discovered that years of budget austerity are taking their toll on IT departments. IT heads report that downward pressure on pay is making it difficult for them to retain key talent. In previous years, companies could offer financial incentives to keep skilled umbrella company contractors but this is no longer the case and competitors are stepping in and poaching key staff.

The recruiter believes that companies need to do more to motivate and engage with talented individuals if they want to retain them.

As far as budgets go, 43% of IT departments saw their budget increase last year, up four percentage points on 2010, whilst 32% saw their budget decrease, up three percentage points on the previous year.

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The government still hasn’t managed to fine tune the clearance system to make sure it gets the best value IT contractors for sensitive projects.

Ministers have been accused of operating a closed shop when it comes to sensitive projects because only contractors who already hold a valid clearance certificate are let in.

Michael Shryance, the head of the national security secretariat, said recently that the Cabinet Office is committed to addressing circumstances where vacancies specify that security clearance is a pre-requisite.

In response to a criticism levelled by the PCG last October, Shryance said he shared the Group’s concerns that some contractors may be excluded by this bad practice. He also admitted that the government was not getting the best value from sub-contractors.

The latest government guidance states that candidates should only be required to hold valid security clearance at the application stage in exceptional circumstances. Despite this, the PCG found that many top workers are still blocked from contracts they deserve, in favour of people who already hold clearance.

It’s something of a Catch 22 situation, but Mr Shryane said it was impractical to put all vetting procedures on a statutory footing, although it would be worth exploring the policy objectives. It would also be worth drawing up a Code of Practice and make adhering to it a requirement for recruitment and procurement professionals who want to gain other forms of certification.

He also welcomed the PCG’s proposal to start a Security Clearance Forum. This would monitor the actions of recruiters and clients and would be a welcome “challenge function”, he said.

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IT contractors with experience in preventing data security breaches could soon experience a big demand for their services.

GFI Software surveyed 200 British SMEs and found that 40% of them have experienced data breaches.

More and more companies are going online and many of them get caught out by booby-trapped spam emails and maliciously attached files. 86% of IT decision makers said they are still receiving at least the same amount of junk mail as they did last year, if not more. 46% have tried to curb the problem using antivirus spam filters and a further 22.5% use anti-spam gateway products. 20% of respondents said they have special software dedicated to preventing spam, whilst 7.5% said they used cloud-based protection.

None of us like to see our inboxes crammed full of spam emails and IT contractors who specialise in blocking these malicious emails should be able to command some lucrative contracts.

Phil Bousfield, the general manager of the infrastructure business unit at GFI, said the problem simply isn’t going away. IT administrators are under intense pressure to find the best and most cost-effective way to deal with email security. As they struggle to get the problem under control in-house, many companies may turn to outsourcing this particular function and let IT specialist contractors devise solutions to combat spam and other data breaches.

Indications are that this is a problem that is going to remain with us for some time to come. It’s probably impossible to stamp the practice out completely, but any software that can rid us of the majority of spam emails will be very welcome.

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Demand for IT contractors continued to grow last month, according to the latest Report on Jobs from the REC/KPMG.

IT contractor demand reached 53.9 on the REC scale, placing IT third in the demand stakes. However, there is still some way to go before demand in the sector returns to last year’s high of 63.2.

In January, recruiters complained that they struggled to find contractors with specialist skills. Last month, only one skill remained in short supply – CIM. Demand for candidates with skills in C++ remains high, especially from defence and security industries.

IT jobs agency Jenrick noted strong demand for C++ developers with experience in a real-time or embedded context in either a Windows or Linux environment. Furthermore, there are some excellent opportunities for contractors working within computer hardware manufacturing and gaming industries to get involved in high-profile projects.

IT engineers were very much in demand last month, topping the temporary demand list and ranking second most wanted on a permanent basis.

The REC report said that all candidates could expect cautious optimism from end-users and from a temporary worker’s perspective, they should not have to worry unduly about the impact of the Agency Workers Regulations.

KPMG, the co-author of the report, pointed out that the slight decrease in contract placements over the last few months might have resulted from AWR, but 84% of the organisations surveyed in February said they were not intending to reduce their temporary headcount this year.

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IT umbrella company contractors might be distressed to hear that the Migration Advisory Committee has recommended that the government should not make changes to the rules concerning intra-company transfers.

Some British IT contractors feel they are losing out under the Tier 2 visa system as organisations bring in non-EU workers, often paying them lower wages than they would for a UK employee. More foreign nationals now come to the UK to work via the ICT route than any other work visas.

MAC says it is unsure whether this has a detrimental (or beneficial) effect on the economy, but it does bring flexibility to the labour market. It therefore recommends that ICTs should remain in place as they are, with the minimum salary threshold at £40,000 for non-EU nationals working in the UK for over 12months and less than 5 years.

Large consultancy companies with their HQs in India will no doubt be delighted at this news. They regularly use the ICT route to import IT workers into their operations in the UK.

In 2009 22,000 non-EU nationals entered the UK on ICTs; in the 12 months leading up to September last year, that figure had jumped to 29,700 and the majority of those were software professionals.

Professor David Metcalf, the chair of MAC, said that some ICTs were invaluable to the UK, but he did acknowledge that the increased use of third party contracting in IT was a matter for concern. He went on to point out that the government could curb the use of ICTs by putting a cap on the number of transfers an individual is allowed to make or raising the skill level.

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Have contractors noticed that their hourly rate has been decreasing over the past 12 months?

According to one umbrella company, average rates have dropped by £0.73 an hour, from £33.12 to £32.39 over the last year. Whilst a drop of 73p an hour does not sound like a lot, it actually works out as £1,287 over the course of a year. Furthermore, this is the second consecutive year when rates have fallen.

Although the government is keen to put an end to gender discrimination when it comes to pay, that gap is actually amongst contractors. The average male contractor gets £33.09 an hour while his female counterpart only receives £30.56. When calculated on an annual basis, male contractors are getting a whopping £4,459 more than females.

IT contractors may think the above figures rather on the low side, but they are representative of the contracting community as a whole.

Contractor rates have been impacted by turbulent economic conditions in the Eurozone and banks and other financial institutions have slashed contractor rates in response.

But before contractors start screaming that they’re hard done by, the average salary for a permanent employee is £26,244; for a contractor the average is £57,087 and for an IT contractor that figure will be even higher.

Once the economy gets back on course, will start to climb up again.  In the meantime, contractors should make sure they are claiming all the legitimate business expenses they are entitled to in order to maximise their take home pay.

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IT contractors will be interested to learn that a new regime for domain names is set to revolutionise the World Wide Web.

There has been a lot of opposition to the move from a variety of organisations, including retailers and advertising bodies, but ICANN is forging ahead regardless.

The Internet Corporation for Assigned Names and Numbers is a not-for-profit organisation, which is tasked with making sure the Internet functions. Thanks to them, businesses, including umbrella companies, will now have the opportunity to create their own top-level domain names.

Under the present system, people wanting to register their website only have 22 generic top level domains to choose from. We are currently restricted to extensions such as .com, .org or .info. There are also country specific extensions such as .co.uk but the restrictions mean it is becoming increasingly difficult for new companies to come up with a logical, relevant domain name.

Global corporations are now being given the chance to apply for a gTLD that features their brand name, such as .microsoft. It will cost a six-figure sum and there’s some legal stuff to go through, but anyone who’s struggling to find a catchy domain will be able to create an entirely new one.

If you’ve got a burning ambition to call your website www.jobebloggs.joebloggs then you’ve only got until April 12th this year to submit your application. After that date, ICANN will consider each application and implement the new gTLDs.

There are concerns that the increase in top-level domains will lead to added security risks giving Joe Bloggs a great opportunity to put his IT contracting skills to good use!

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IT contractors may be pleased to learn that Tata Consultancy Services intends to hire around 1,500 British IT staff in 2012.

The Indian giant employes a total of 227,000 staff around the globe, 6,739 of whom are based in the UK. The company now intends to increase its headcount at its offices in Basingstoke, Glasgow and Leeds. British Airways is one of the companies that benefits from the services of Tata Consultancy.

TCS, along with other software companies from India, are increasingly bidding for both public and private sector contracts in the UK and we are now seeing an increasing number of Indian software companies recruiting in this country.

This is something of an about turn as up until recently a lot of UK IT jobs were outsourced overseas and software was developed in India and other Asian countries such as the Philippines.

Infosys and Wipro are among other Indian companies that are also hiring UK IT staff. If this trend continues, the big Indian companies could become a major force in the UK’s IT industry and this would be good news for IT staff and contractors.

All in all, the prospects are looking good for IT contractors. 20% of organisations intend to increase the amount of IT roles in their companies by 2017 and 15% say IT will be their main focus in the first few months of this year.

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IT umbrella company contractors are well placed to weather the jobs storm, according to the results of a recent survey by the CIPD.

When the Institute asked hirers about their recruitment plans recently they discovered that 20% of hirers intend to create more jobs in IT over the next five years. The only occupations that were classed as ‘hotter’ were business development and sales and marketing.

In the shorter term, 15% of respondents plan to concentrate their efforts on their IT departments. As far as demand goes in the current quarter, IT candidates top the hard skills list, although people with soft skills such as secretaries and sales assistants will probably find themselves in even greater demand.

Despite the positive outlook for IT hiring, the overall outlook is bleak with 60% of companies saying they will not create any new positions before the end of March. Added to that, firms in the private sector are expecting to reduce their headcounts at the fastest rate since the spring of 2009.

The private sector seems to have moved past wait and see mode and decided the time has come to make redundancies due to worsening economic news. This will impact the prospects of all job seekers, but there are also micro challenges facing British born IT candidates.

It transpires that organisations may continue to prefer to hire IT workers from outwith the European Union. Already non-EU migrant workers are more likely to be found in the IT sector than any of the other industries that regularly look for staff.

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No sooner has the furore surrounding Mr Lester died down, it now transpires that the Department of Health has been paying 25 senior members of staff through limited companies. In fact more than £4 million has been paid out in this way.

While the Revenue has been busy tracking down IT contractors caught up in IR35 legislation, senior employees in the Government have slipped through the net, saving themselves vast amounts of National Insurance and income tax in the process.

It is not uncommon for senior executives in the private sector to get a three-year rolling contract and receive payment through a limited company. This trend now seems to have spread to the public sector as well.

The Department of Health is in denial, saying that the individuals concerned are genuine contractors despite the fact that some of them have worked for the Department for several years. Could it be that the Government was struggling to attract top talent and this ruse was the only way they could justify paying them more money? Remembering that the ‘employer’ does not need to pay the employers NI contributions of contractors, this could well be feasible.

But the fact remains that HMRC has been keen to force IR35 onto the contracting community and all the while, senior Government staff have been doing exactly what the Revenue is trying to stop! Are we going to see more departments emerge with egg on their face?

David Cameron says he wants more transparency in the Government. It seems there’s a long way to go before that becomes a reality!

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IT contractors may be interested to learn which skills are currently in short supply in the IT sector.

According to the latest Report on Jobs from the REC/KPMG, the shortage of contractors with Citrix, Datastage, Firewall, .Net and Oracle skills that began at the end of last year continued in January. Last month, two new skills were added to the list; Business Analysis and Security.

The REC said that recruiters are now struggling to find candidates with skills in the above-mentioned disciplines.

Demand for IT contractors increased slightly in January according to the REC index. It scored demand at 51.7, compared with 51.4 in December. However, that is still well down on the figure of 61.2 recorded in January 2011.

It has been suggested that the decrease in temporary billings is linked to AWR but as yet there is no conclusive evidence to back up that suggestion. Kevin Green, the chief executive of the REC, acknowledged that there had been a dip in billings for temporary staff, but said employers are still taking advantage of flexible working arrangements.

He went on to point out that employers have also started looking for permanent members of staff even though the economic outlook is uncertain. Demand for full-time IT staff rose in January, although the skills shortage problem once again raises it head.

Agencies recruiting for full-time IT staff have had problems finding developers, database administrators, IT marketers, C#, .Net, SAP and Security candidates. They also report a lack of applicants for DB2 and Datastage positions.

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