Encourage IT Contractors | Ten reasons why the Government should do it

Encourage IT Contractors
Encourage IT Contractors

Encourage IT Contractors

The Government seem to be doing all they can to destroy the IT contracting profession. It may not be deliberate – but that‘s the way it seems. It should encourage IT Contractors instead.

So how could we convince them that IT contracting is very useful to UK plc? Here‘s my bash at it:-

Need in the Marketplace

It’s a need in the marketplace that created Contractors in the beginning..

Companies often have peaks and troughs in their work, e.g. when they have one-off IT projects, and don’t want to take on permanent staff for the peaks of their work, that they will have to make redundant later when the project is over.

Protects the Jobs of Permies

When a downturn comes, companies have an easy way of cutting costs by giving notice to contractors. That protects the jobs of the permanent employees.

It is also relatively inexpensive to do compared to making permanent staff redundant.

It is also less traumatic for the company as contractors accept the risks of their profession.

No More Expensive

When taking into account the extra employment costs of an employee, the current cost of contractors, at 1.7 times the salary rates of employees, makes contractors around about the same cost to companies as their permanent employees.

Pay UK Taxes

All UK contractors pay their taxes and National Insurance in the UK. If companies take on workers from non-EU companies, then many of those will be paying their taxes offshore as that is where they receive their salaries.

Future of the UK IT Industry

There are, according to various figures, between 200,000 and 275,000 IT companies in the UK. Most of these will be the businesses of IT contractors.

There are very few major UK IT players that rate in the world. In fact only one software company, Sage, are in the FTSE-100.

There are very few UK IT companies with a market value of over 100 million pounds. That’s only the value of a good BMW car dealership.

If there are to be more IT companies to take their place on the world stage, the current crop of small IT businesses line IT contractors are the most likely breeding ground for these. The Government should encourage IT contractors more at they are the potential entrepreneurs of the future.

Spread Ideas

Because they move from company to company, these contractors cross-fertilise British companies with new ideas that they’ve seen work at other companies.

Without this movement across companies, the spread of these best practices would be much slower. This yet another reason why the Government should encourage IT Contractors.

Well Educated Resource

Figures from e-skills show that software developers / analysts are the best educated group in ICT with 65% of them having university degrees – higher than that of IT managers.

The reason for this is that many of the best software developer go into contracting instead of into IT management.

This gives companies a highly educated and highly skilled labour force that they can use at short notice and for short periods of time.

There for Emergencies

Sadly, most IT projects in the UK (as elsewhere) come in late and over budget. When projects start to become late, companies can take on short-term contractors at short-term notice, and lay them off just as quickly when the project gets back on track or when the project is over.

If those contractors are not available, then companies would have real trouble when they hit problems.

It may well delay their Time-to-Market for the software component of their new product, which could mean that non-UK competitors could get their products to market first – taking the lion’s share of the marketplace.

More Productive

Most programs in IT are written by people with less than 2 years experience.

As IT programming is quite a hard skill to learn, it means that the quality of the software component of UK products may not be very high.

Most companies promote their IT workers of more than two years experience.

However contractors will almost all have at least 3 years experience of software development, and they will often have more than 10 years experience.

The difference in productivity between a developer of 10 years’ experience, and one of 18 months’ experience, will usually be immense – as will be the quality of the software product created. So they should encourage IT contractors more.

Keep Their Expertise in the UK

Any business or technical knowledge gained by UK contractors remains in the UK and is not taken offshore.

It will be used for the benefit of other UK companies.

So, to sum up, the Government should encourage IT Contractors rather than keep taking aim at them. They are very necessary for the success of UK businesses.

Ad – Contractor Services

If you do need an umbrella company you could try one of the following:-

Simply Umbrella

Public Sector Umbrella Company

For Mortgages specially designed for contractors try Specialist Contractor Mortgages.