The information technology field in recent years has seen a tremendous growth in the use of contractors to undertake work for organisations - particularly in the project management and applications development sectors, but also in traditionally core areas like user support and systems maintenance.

This is particularly true in the Australian Federal Government. The drive towards outsourcing has seen large numbers of highly capable staff move to contracting rather than be swept up in the outsourcing companies. Moreover, as departments have moved to focus on applications development and internet enabling of services, the demand for contract staff has increased.

Most contractors typically find work through contracting agencies. These organisations are in close contact with government clients and other organisations, and identify suitably skilled contract staff for specific requirements. These organisations are essentially the sales force for individual contractors, and while they are valuable resource, their focus is typically on serving their clients rather than the contractors themselves.

Although some Departments do on occasion engage contractors directly, there is a considerable amount of effort involved for them to do so, and generally involve accepting an onerous set of contract risks and professional indemnity insurance expenses.

Contracting agencies essentially provide two engagement alternatives to contractors:

• treatment as an employee for the duration of the contract
• contracting with a proprietary limited company, through which the contractor operates.

Under either arrangement, the contracting agency makes their profit by taking a margin from the gross billable income of the contractor (either on a percentage of rate basis, or at a fixed rate per hour) as each invoice is issued, together with any taxes or fees that must be deducted as appropriate to the employment arrangement (including payroll tax, superannuation, workers compensation etc.).

However, contracting agencies strongly prefer to deal with companies rather than individuals, due to the costs and complexities associated with employing people for limited periods of time, and quite often encourage new contractors to operate through the companies of established contractors if the individual is not prepared to set up their own company.

More often than not, however, individual contractors have chosen to establish their own small companies, particularly where there is an opportunity to obtain further tax advantages. However, these opportunities have been steadily decreasing as governments have refined and modified their approaches to tax collection, particularly in the area of the collection of payroll tax.

The OTOBAS Group

At the OTOBAS we understand this situation, and have developed a flexible employment and engagement model that ensures that our contractors receive the maximum return for their effort. This is good for the contractor, but also good for the client as minimising our margins ensures the most competitive price when bidding for work

We are always looking for new staff who are happy with the contracting experience, have a good track record, who are self supporting and who are seeking above average remuneration flexibility.

If you are considering giving up running your own company, or if you are someone contemplating contracting for the first time, we may be able to offer you a viable employment alternative. If you are considering restructuring and expanding, we may be able to provide you a few tips about what is involved, and assit you with some of the administrative aspects of running a larger company.

For further information, please contact us, attaching a brief description of your background and expertise - you may be just the person we are looking for!