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Blog // 18/10/2016

IT personnel – what should e-commerce retailers be thinking about?

What should e-commerce and retailers be thinking about when it comes to IT?

E-shop open for business – The internet continues to generate an increased proportion of retail sales and as the e-tail sector grows, robust IT resources are vital in avoiding missed sale opportunities.

Richard Singleton_320X238While retail businesses currently cover the full spectrum of businesses, from those solely offering an online service to those yet to embrace e-sales at all, it is certain that the majority of retailers will rely heavily on online sales in the future.

As the e-commerce trend grows, IT hardware and software is key but even more important will be your IT personnel. Without them, your IT infrastructure may fall behind and ultimately your business may suffer to compete in today’s evolving market. These people are key to developing and improving the customer experience which will help generate a loyal customer base from a largely impersonal experience.

Are your IT personnel tied into your business?

e-commerce-it-systemsMany within the IT sector prefer to operate as contractors, usually through a Personal Service Company (PSC). This may be for freedom to pick and choose contracts and to be able to move between client so they always undertake the work they want most. Alternatively, this may be to take advantage of lower tax and NIC rates historically available to those genuinely self-employed.

However, this represents a challenge to e-tailers. How do you tie in these key personnel if they are an independent contractor? Given the rapid expansion in internet sales, there is a demand for specialist IT workers and businesses may need to strengthen the relationship to prevent contractor switching to a more lucrative contract.

How do you protect your business?

e-commerce-it-supportPerhaps a really good contract with severe penalties for failing to provide continuity of service will do the trick. Well, maybe, but even if you can get the contractor to sign this, it is likely to require legal action to actually enforce and is unlikely to provide the instant response you require if your IT system fails.

A more effective way forward may be to encourage the worker to become an employee. A few months ago this probably would have been unattractive to many IT workers, but the recent increases in dividend taxation rates has reduced the “saving”. The concerted attack by HMRC’s false self-employment team and in particular the dreaded “IR35” may make this the right time to tempt your IT consultant to become a permanent employee. The reduced differential in taxes combined with the increased risk of detection may now make some more open to an approach, particularly if they have been working with you for a while.

How to entice the contractor to take employment?

This will vary from business to business, but the key here is an attractive offer that ties the worker to the business. Menzies LLP has specialists to help you with employees retention, engagement and rewards to help you keep the best retain the best talent.

For further information, please contact Richard Singleton on 01252 894942 or email rsingleton@menzies.co.uk.

Menzies Retail Sector Expertise

Richard Singleton is a member of Menzies Retail sector team who work closely to find solutions to industry issues for retail, wholesale and online retailers, as well as sector-dependent clients. We utilise our expertise in everything from business strategy and corporate finance, to audit and tax advice.

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