Where is your IT contracting career going

Recently, I published a post pointing out my optimism for the contracting world amid promises by HMRC to bring in a more objective tool for working out if someone is inside or outside of IR35. This tool will first be released to the public sector meaning if you’re contracting with the public sector now, it’s vital you ensure your relationship is outside of IR35 if you’re looking to act as a ‘real’ business (and not a disguised employee) which generally also means more money for you.

So, with IT contractors facing some important, possibly career defining questions it seems pertinent that a broader and higher level approach is taken to planning for the future. Working practices will affect IR35 status so it’s a given that this point should be looked into, but what about market trends, opportunities and risks within the IT sector?

Here are a few important points to consider when deciding on a future path:

Is your role sustainable long term?

The introduction of the new status tool will massively help to clarify IR35 status and ensure contractors are empowered to make decisions as to how they work. Initially this will only be the public sector so for those working in this area it could prove helpful.

However, as many public bodies will be responsible for assessing status, many may air on the side of caution and place blanket assessments of status on particularly roles. What if it changes the status you’ve been assessed at so far or your own belief about your status?

You may need to change the way you work. However, in some contract roles this might be harder to do than others so it may mean having to make a decision to work under IR35 which has negative financial implications for contractors while continuing doing the roles you know well. Or if you’re looking to remain outside of IR35 and operate as a ‘real’ business, you may need to look at diversifying into other roles.

Private or public?

In the event that there are blanket assessments of IT roles, public sector bodies may look to increase their permanent staff and simply hire on an interim basis for the flexibility or we may see opportunities arise that are only offered to contractors. How this will affect wages is unknown but with more cuts being announced in the budget it may be harder for public bodies to reach higher rates.

This may mean a lot of contractors choose to operate within the private sector more. Depending on how many make the shift it could affect supply and demand and therefore could have the reverse positive impact on wages within the public sector, particularly in more specialist roles.

For those that do move to the private sector it’s likely that many contractors will look for the areas they know best, but this may not necessarily be the best career move.

What areas of IT are growing?

According to Tech Cities Job Watch who survey salaries within the IT industry, there is still a shortage of skilled IT professionals across the country, but particularly within IT Security, Cloud, Mobile, Big Data and Web Development. It may be worth contractors looking at developing skills in these five areas now so they can join the curve.

The largest pay rises in the industry for contractors are in IT Security (10%) which is also receiving a lot of publicity as a growing area. New dedicated recruitment companies to cyber security like Gardpass will support the rise for those IT professionals that have transferrable skills.

But it’s also pertinent to note the possible effects of exiting the EU on IT demand. It’s hard to make any valid conclusions at this stage, we know that there are a lot of skilled IT workers who move to the UK from Europe but it’s hard to tell whether that will cause a rise in earnings due to reduced supply or whether it will encourage a more UK IT market where the current generation exiting university will have more opportunity. This is the first generation that has been taught on computers extensively so it may simply lead to a younger workforce taking lower wage employed positions. Despite the various possibilities, because IT contractors are very highly skilled, experienced individuals the most likely outcome is an increase in demand and as a result an increase in daily rates.

How will your costs affect the future?

Although the majority of IT contractors choose to operate through a Limited company, some do operate under Umbrella for its simplicity, however with changes in legislation now in affect that seriously diminish the benefits a contractor can receive from expenses some will choose to finally take the step into running a limited company, some will simply be worse off (I.e. no tax relief on expenses) and some will need to be proactive with their client, agency and Umbrella company in order to still take advantage of tax relief on expenses (if they can prove they are not under supervision, direction or control).

At PayKeeper we’ve been ready for this trend for a while and can support contractors whatever their route. However, we’ve taken it one step further by creating a partner network for our clients to help them save money on the most common expenses. We have training partners who offer IT security, web development training, mobile development training and more at exclusive discounted rates. We have partners that can help contractors with mortgages no matter how long they’ve been out of full time employment or can support key investment decisions about life insurance, pensions and investments. And we have many more partners supporting contractors in other key areas.