Budget 2009, Reaction and Response, what it means for IT Contractors
There was mixed reaction at Vector to the preliminary headlines which started to filter into the media during yesterday afternoon.
Martin Pite, Applications Development Team Manager, said: “Now that we have seen the full statement, we can start to consider how this will affect both our contracted suppliers and our clients.”
“We find that the initial reaction to any budget announcements with our contractors tends to focus on ‘What does this mean for me?’ For example, the PCG has noted that around 50% of its members will be caught either by the removal of the personal allowance and/or the new super rate of tax on incomes exceeding £150,000 p.a. Not surprisingly, many were also holding their breath to see what amendments would be made to IR35, compliance rules and proposed income-shifting. The mood of those long-term contract professionals generally reflects feelings of a lack of support to small, entrepreneurial businesses who feel beset under Parliament by unclear and ever changing rules. Feelings not improved by the perceived lack of new contracts in certain segments of the market.”
The Consultants at Vector empathise with the hundreds of contractors they manage every day, as they too are a specialist business who need movement in the market to continue to evolve the range and volume of services Vector offer to their end clients.
Martin, added: “However, we remain very positive about the prospects for our contractors and clients as we move through this fiscal year. Like you, we provide a bespoke service aimed at delivering solutions to those businesses that need specialist help in the short to medium term. Many of our clients now favour a contracted solution to increased permanent headcount, and contracts increasingly have defined deliverables which motivate accurate and efficient service-delivery. Like good PR, the resulting shift in client attitude is positive for professional contractors, who are perceived as solution providers. Achieving a deliverable also increases the feeling of value for money, and the likelihood of repeat custom.”
“Within the Applications Development sector, only 1.4% of programmes have been closed in the last six months, which given the scale of the market is sufficiently low to have limited overall effect. In discussion with those who have been in this industry through more than one downturn, it is heartening to see that, with the right marketing and attitude, a consistent flow of valuable contracts is possible.”
“As Budget busting measures, I advise those of you who are committed to contracting to hold your nerve. Rates remain robust in all niche and most development skill-sets, and we have seen little reduction in overall demand for services from our clients. Remember that your rate should reflect your skills, and what value each contract has to your business. Those who treat rate as a commercial variable will fare better than those who are insistent on being pegged to ‘market average’. If you are between contracts, or approaching new contracts, work on your profile to ensure that your very best qualities are clearly described. Attention to detail, interview research and flexibility will guarantee you maximise your chances. With literally hundreds of thousands of contracts being offered throughout the UK every year, giving yourself the edge in finding one is the key to riding out the worst of this market, whilst maintaining your skills for the inevitable upturn.”
