Brexit: Shrewd IT contractors will make hay while the sun shines

It’s a question we were all asking pre-referendum. How will a vote for Brexit affect IT contracting? Unfortunately for those who like quick answers, it’s a question we’re still asking some 55 days after the UK’s decision to exit the European Union, writes David Taylor, managing director of contractor recruitment firm First Point Group.

Before the vote, there was mass debate, and with all the political scaremongering; it’s safe to say we were worried about the implications of the UK leaving Europe. Well, it happened and interestingly in terms of our business, which specialises in placing freelancers and C-suite contractors across the IT and telecoms industries, little, bar the currency drop, has changed. This may very well be because any actual changes in legislation haven’t been decided yet, and according to many commentators, won’t actually be implemented until 2019.

For now, we are left best-guessing what the future will hold. There will invariably be challenges. For example, given that money talks, currencies and taxation regulations changing with Brexit are inevitable. Will it become less expensive to hire UK-based contractors and move them to mainland Europe? Will it be more expensive to hire contractors into the UK from mainland Europe? Money, as ever, really is the crux. If the wind blows too far either way it could lead to a brain drain or a failure to attract tech talent to our shores. 

Secondly, bureaucracy and paperwork will increase. The EU loves forms and rules, and changes to the freedom of movement principle for both the UK and its former EU partner nations will create fresh challenges for those looking to hire contractors.

As to what will prevail, will it be market optimism or the fear factor? For both contractors and end clients, if fear prevails then it could impact the contractor labour market possibly more adversely than any other factor. But almost two months on, post-Brexit decision, I am pleased to say that the contractor market has not been hit with the dreaded hesitancy which can come from huge changes, like Brexit.

In fact, to date we haven’t found that businesses have stopped hiring in the UK and Europe and we have certainly not seen a drop in contractors’ confidence when applying for new roles, or rates. Some wobble may come when the UK government formalises the invocation of Article 50, and businesses know what they are facing – but for now, it’s a case of ‘make hay while the sun is shining.’

Not all contractors are basking in the summer warmth however. In the financial services industry, IT contractor rates have been freshly cut (Barclays, Morgan Stanley, Credit Suisse, Citi, Clydesdale Bank, HSBC and Legal & General Investment Management). To us, all this shows is that the financial services IT contractor market has been hit by the Brexit decision more than other markets. For me, this is a simple case of the banks being opportunistic.

But what’s the outlook like in the tech and telecoms markets, where many contractors might migrate to in light of the banks and insurers paring back pay? In our niche, it’s pretty buoyant in both the UK and Europe right now, particularly in the areas of OSS/ BSS, Cloud and Big Data. Indeed we anticipate a rise in new contract roles as the summer months end, and an increased number of new opportunities from our clients moving into September, one of the busiest months in IT contractor recruitment. And to date, since the Brexit decision, we haven’t seen daily rate cuts or drops from our clients.

So while Brexit is still daunting, the specific implications for IT contractors cannot be pinpointed yet or at least haven’t so far showed themselves at the coalface of IT contractor recruitment in London. With demand and rates generally holding, it’s no wonder that temporary IT specialists are taking advantage while conditions are still good.

Editor’s Note: Related Reading –

UK IT jobs up 14% since Brexit vote

Brexit won’t banish EU data rule, techies told

Contractors’ Questions: Is Brexit already affecting my finances?

EU VAT group reassures e-traders on Brexit vote

Brexit: Why insolvent EU clients will be more of a problem

Brexit Budget binned as Osborne is deposed

Companies told 'new normal' is in six months

Contractors’ Questions: Will IT contracting ‘go Swiss’ in a Brexit?

How a Brexit could change EU contracting

Call to axe IR35 and T&S reforms amid Brexit

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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