Contractors looking for the best location for contracting abroad can use the latest Global Competitiveness Report 2014-2015 published by the World Economic Forum (WEF). The top ten most competitive countries include many of the top overseas contracting destinations for UK contractors.
In contrast, the report also identifies those countries that may offer fewer opportunities for contractors, although many remain attractive destinations for engineering, oil and gas and other contractors with niche skills.
The UK has climbed a place in the rankings, from tenth place in 2013-2014 to ninth in the latest report, suggesting that the country remains one of the best contracting locations for those contractors seeking work closer to home.
And the report highlights that the UK’s flexible workforce, level of technology adoption and capacity for innovation, features that are underpinned by contractors, are what has led to the climb up the rankings.
The leading contracting destinations
Switzerland is top of the WEF’s Global Competitiveness Index for the sixth year running, with its highly sophisticated business environment, capacity for innovation and flexible labour market. However, recent moves to limit the number of European Union (EU) workers allowed to work in the country may reduce its attractiveness for contractors.
Singapore is in second place, and already the top Asian destination for UK contractors working abroad. Labour market flexibility is cited as a major factor for the country’s high ranking. However, the WEF says there is “room for improvement” in its business sector and capacity for innovation – areas where contractors can help.
The USA, Finland and Germany come next, in third, fourth and fifth place. Germany and the USA are two of the most popular contractor destinations globally, with the USA offering the most business opportunities for contractors because of the sheer size and scope of its economy.
Germany’s competitiveness could be improved “if its labour markets were made even more efficient”. Contracting in Germany is highly regulated, and contractors working there need to operate through specialist umbrellas that have the right permits to be legally compliant.
Japan and Sweden suffer from over-regulated labour markets
Although both Japan in sixth place and Sweden in tenth place score highly for tech adoption and innovation, WEF highlights that both suffer from over-regulated labour markets.
Contractors can operate in these countries, but like Germany, face a raft of regulations to overcome. Swedish workers are also highly taxed, making it a less attractive proposition for contractors evaluating long-term contracts.
Hong Kong and the Netherlands, in seventh and eighth place respectively, remain popular contracting destinations, in part due to their labour market flexibility and ready acceptance of the contractor/freelancer model.
Hong Kong’s financial sector is a strong market for financial and IT contractors, and it has an existing flexible labour market. The Netherlands, although highly taxed, offers a wide range of contracting opportunities across most contracting disciplines, including oil and gas.
The UK has risen by one place, thanks to its flexible workforce
The UK is in ninth place in the 2014-2015 rankings, climbing one place when compared to the 2013-2014 report. WEF identifies three factors that contribute to the UK’s attractiveness: its flexible workforce; its capacity to innovate; and the high level of information and communication technology (ICT) uptake “that is one of the highest in the world”.
Contractors underpin these factors. The contracting model is inherently flexible, and the UK’s flexible and highly skilled knowledge-based contractor workforce is a major factor influencing inward investment by contracting clients. Research by Cranfield University has also shown that contractors drive innovation and efficiency in the organisations where they work.
The report notes that the UK’s “highly competitive and large market, allows for highly sophisticated and innovative businesses to spring up and develop”. These businesses tend to be large consumers of contractor services, making the UK a highly attractive contracting market in its own right.
Less attractive markets for contractors
At the other end of the scale, WEF’s Global Competitiveness Index shows that the contracting markets in Sub-Saharan Africa and emerging and developing Asia are likely to be the least attractive for most contractors.
WEF's Global Competitiveness Index shows that the contracting markets in Sub-Saharan Africa and emerging and developing Asia are likely to be the least attractive for most contractors
In 144th place is Guinea, with Chad, Yemen, Mauritania, Angola, Burundi and Sierra Leone as the next least competitive. Haiti and Venezuela are the poorest performers in South America and the Caribbean. Timor-Leste and Myanmar are Asia’s poorest performers.
Despite their low level of global competitiveness, many of these locations are still strong markets for contractors working in niche areas such as oil and gas and energy, mining, infrastructure and international development.
In conclusion, the report shows that in addition to a buoyant home market with high demand for their services, contractors will find strong contracting markets overseas, if they pick their targets carefully.