After early optimism regarding IT spending at the start of last year, predictions from IT analyst Gartner suggest that 2012 will be even bigger, with many firms investing a lot into IT in order to stimulate growth.

Gartner have predicted that IT spending will increase by 3.7%  to £2.45 trillion worldwide, however this was slightly lower than their initial prediction of a 4.6% increase, due to factors such as the Eurozone crisis and the general slow economic growth worldwide.

This rising level of spending has led more UK workers to become self employed to take advantage of the contract IT jobs that are expected as a result. Recruitment companies are already reporting an increase in availability of technical jobs, in areas including software development. Leading recruitment body, the REC, also reported rising trends in IT jobs in their latest report on jobs.

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REC Chief Executive Kevin Green was still confident that the UK jobs market is resilient and functioning well despite the tough conditions. He said that “there are clearly signs of decline but we are nowhere near the lows seen in 2009 when the market deteriorated at a drastically faster rate than we are seeing today.”

“Employers are still hiring and using temps in large numbers; however, they are starting the year on a cautious note and are taking their time to make workforce decisions. The quicker the Eurozone sovereign debt crisis is resolved and we get some economic visibility, the better it will be for employer confidence and the UK jobs market.”

Whilst sectors such as engineering, technology and IT were reported to be performing well and remaining strong, Bernard Brown of KPMG comments said that it was “a huge concern to see temporary placements falling in tandem with permanent employment opportunities.” He said that “the decline in temporary roles is a clear indication that businesses are too nervous to even make short-term commitments” which does not inspire hope for the year ahead.

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PeoplePerHour.com released the report which showed a staggering 612% increase in the number of businesses hiring IT consultants. PeoplePerHour.com founder and CEO Xenios Thrasyvoulou said that the latest figures show that the IT sector is weathering the difficult economic climate well.

“Our figures show that IT Consultants are in high demand over the run up to Christmas. Businesses are able to increase their margins using freelancers and make the most of the extra income to be made over the festive season.”

In a separate report, it was found that IT contractors working on e-commerce tools for smart phones and tablet computers are being paid around 20% more than workers in more ‘traditional’ e-commerce roles.’

Iain Blair, Director at ReThink, said: “We are seeing a large wave of work as retailers beef up their mobile retailing offerings. They see mCommerce as an exciting new sales avenue and are more aware than ever of the potential boom in revenue from giving customers a highly customised and slick mobile browsing experience.”

Those IT contractors with these specialist skills are able to demand a higher rate and may find roles easier to come by as more and more retailers see having an mCommerce platform a top priority.

Reported by The Register, the investment banking division of Barclays Bank told their temporary workers that the cut would come into effect on 5th December. Contractors had until 11th November to inform them if they did not wish to accept the new rate. As well as the rate reduction, contractors have also been told to take a 10 day break before the end of the year.

Swiss bank UBS made a similar move in September by reducing their contract worker rates by 10%. In some cases they gave their contract workers just one day to decide whether they would accept the reduction in rates or leave. Rate cuts have also been announced at Deutsche Bank, Lloyds, Nomura and RBS.

These rate reductions are widespread across financial institutions and others may be soon following suit. BNP Paribas is reportedly planning to slash its contractor rates by 15% from 15th December and Bank of America Merrill Lynch could also announce a rate cut next week.

Are you an IT contractor working within the financial sector that has seen a reduction in your rates? Have you accepted the cut or found a contract elsewhere?

Talking about a slowdown in the permanent jobs market, REC Chief Executive Kevin Green said that the government need to support small businesses in order to encourage job and growth. He continued;

“We have been calling for this over the past two years but as the situation is now becoming critical, the Chancellor must address this in his Autumn Statement later this month.”

He said that there has been a good level of growth within the technology and engineering sectors, as well as across the temporary jobs market.

“Employers’ use of temps increased last month – fantastic news following the implementation of the Agency Workers Regulations on October 1. This again demonstrates the importance of the UK’s flexible workforce in helping businesses meet fluctuating demand and keeping people in work.”

Bernard Brown of KPMG also described the temporary placement growth as positive, but was more cautious when describing the permanent job situation saying; “We are still on a knife edge as we enter a critical time for European economic stability.”

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Although adverts for contract roles had increased, annually, Inner London added the most new IT contracts but the rise has not been widespread. In this last year the North West has seen IT contractor job adverts fall by 13%.

Reported on Contractor UK, IT candidates looking for public sector work on a contract basis saw relevant ads decline by almost 40%. Financial services added more IT contracts than a year ago, as did software houses.

Jobadswatch reported on its findings and believed that the upturn was on course to continue. They explained that contractors are usually the first in the door once end-users perceive hiring conditions to have improved.

These findings tally with the latest comments from the REC which outlined feedback from recruiters who placed staff in temporary posts in October and spoke of an “improvement in employers’ optimism about their future hiring intentions”.

However, businesses have to be sure they hire the correct people when it comes to protecting their IT systems. Recruiters have to also be confident they identify candidates equipped with the right skills to prepare for the shifting IT landscape.

For IT contractors, this increased demand for security specialists gives them the opportunity to evolve and capitalise on the opportunities in security. Research conducted by CWJobs found that 82% of IT professionals intend to skill up on security capabilities to boost their existing skill set.

The increase in demand for security specialists is also met with more attractive daily rates when compared with an IT analysts daily rate.

In conclusion, Richard Nott of CWJobs.co.uk said;

“The increasing threat posed by cyber criminals means those with security skills such as risk and firewall management are invaluable to the future of UK businesses.”

Speaking to the Telegraph newspaper, Mr Schindler said that a Google based study completed by marketing consultants McKinsey found that “in a mature economy like the UK, the internet is responsible for a fifth of GDP growth” and continued that “given the rate of job creation that economists associate with a rise in GDP, this translates into an expectation of hundreds of thousands of new jobs thanks to the internet.”

He said that with a real focus on growth and improvement in this sector then the “sizeable number” of jobs he is suggesting could be achieved.  Schindler also said that he believes the UK government “really understands there is a need to drive technology and innovation.”

In discussing the areas which he expects to perform well and see real growth, such as in broadband, mobile and cloud computing, Schindler said “The internet is the biggest driver of export opportunity you will find over the next decades.” This should transpire well for UK based IT and engineering contractors as it could open up London based jobs within Google itself.

“The UK is our second largest market in the world. In a lot of areas in the UK businesses are defining the online world globally, they are innovation leaders. In terms of investing in the UK, we will obviously continue to invest in the UK – on the engineering side and the business side. We’ve just opened our third office here in Soho, it has a lot of seats.”

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The figures from ReThink Recruitment rank London as the number one in terms of creating new IT jobs, with 40.3% of new positions based in the capital. The rest of the South East contributed another 23.9% which meant that overall London and the South East created close to two thirds of new IT jobs.

ReThink Recruitment director Michael Bennett, believes that this is thanks to the rise in financial services and businesses seeking to grow following the recession; as recently seen with RBS’ use of contractors. He said; “London has a large number of banks and financial services firms headquartered in the city and many of these responded to the downturn by cutting IT departments. When business volumes increased, so did requirements for qualified IT staff.”

Speaking about the various IT positions and roles that are in demand he said; “Regulatory pressure and greater reporting requirements are also forcing banks and other City firms to strengthen their compliance and risk management IT systems. Many are restructuring their front office IT systems to ensure greater transparency, which could explain this on-going demand.”

Despite IT contract job demand rising Scotland, they only contributed to 2.7% of IT jobs, behind the other large regions in the UK such as the South West (5.8%), North West (5.5%), West Midlands (4.3%) and Yorkshire (4.1%).

ICS are one of the leading contractor accountants and administration companies and have helped thousands of contractors working in a range of industry sectors. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.

The party stated; “Although we recognise the problem IR35 was supposed to tackle, it has not served the needs or the interests of IT contractors. The taxation system must evolve to support modern working practices rather than discouraging small businesses.”

They said that they do understand the difficulty involved in finding an alternative, with the government looking at keeping IR35 unchanged but improving the administration; currently being undertaken by the IR35 forum. They continued;

“However, there remains a possibility that IR35 will become redundant, should the merging of income tax and National Insurance occur.”

“We recommend the suspension of IR35 in order to gather more data on permanent abolition. This is partly because the merging of income tax and National Insurance is likely to prove a very difficult long-term endeavour.”

In summary, the paper was very supportive of SMEs and of the fair procurement of government IT contracts. The coalition government are currently working to try and support these very issues through the reduction of red tape, but the abolition of IR35 would be a huge relief for the freelance community.

ICS are one of the leading contractor accountants and administration companies and have helped thousands of contractors working in a range of industry sectors. You can contact us now for a tailored proposal based on your individual circumstances as a contractor.