Indirect Tax & Customs Market Report, Q1 2023

Shooting down UFOs, rising nuclear tensions, earthquakes, the collapse of Silicon Valley Bank, the continuation of layoffs in the technology sector, mass riots in France, and tech CEOs jointly signing an open letter on the threats that rapid AI advancement pose to mankind…

That’s just a sprinkle of what’s been happening this past quarter. 

No one can say that we didn’t start 2023 with a bang. Whilst we haven’t quite observed anything as bizarre as shooting down UFOs, the indirect tax and customs recruitment market followed this trend – and of course, we’ve seen the indirect tax community building up to celebrating VAT turning 50! 

Before we get into the specifics of indirect tax and customs recruitment, hiring across Q1 in general has been shaped by 

  • A reduction in permanent placements, albeit at a slower rate than in recent months
  • Growth in the number of temp placements
  • The number of vacancies increased for both temp and perm roles within the accountancy & finance and professional services sectors
  • Availability of candidates continued to reduce
  • Starting salaries continue to increase but the pace of increase has slowed slightly

These are insights from a joint report produced by Recruitment & Employment Confederation and KPMG, who have been commentating on the general employment market across the UK. We share these snapshots because the majority of these are fairly synonymous with what we’ve been seeing across the indirect tax and customs recruitment market.

So, without further ado, let’s see what happened…

Mid-tier leading the charge in the UK, while the Big 4 dominates in Europe

The recruitment scene across the accountancy firms has been a mixed picture. The big 4 in the UK have been relatively quiet when it comes to indirect tax recruitment, and there has been virtually no customs or trade compliance vacancies coming onto the market. However, we have seen a strong appetite for VAT Managers and Senior Managers in the mid-tier firms, who have been leading the charge in the industry. In comparison, the UK’s top tier has remained buoyant, though we have not observed any surge in demand.

On the contrary, the recruitment scene in Europe has been totally different. With the exception of EY (whose appetite to hire has been less publicly visible due to the impending partner vote on the future of the firm), Big 4 activity across the BENELUX and DACH markets has remained high. Outside of the Big 4, there’s little to talk about except the odd manager and senior manager that we always expect to be released. It will be interesting to see how the recruitment scene evolves in the coming months, and we will continue to monitor it closely.

Activity aside, one noticeable characteristic of the past quarter has been the amount of mid tier firms who are deepening their pockets to attract and retain candidates. Historically, remuneration in the accountancy space has always been a tiered structure with the Big 4 representing the top payers, followed by the top tier, and then the mid tier and boutiques. It’s certainly not been a recent trend but the high demand in the market has upset this model and we personally saw many firms last quarter paying Big 4 salaries’ or higher to secure candidates. When we combine this with the survey responses that sit behind our Indirect Tax Salary Guide, we really are reminded how competitive the market is becoming. Don’t forget to register your interest in our Indirect Tax Salary Guide, due to be released this quarter.

There was nothing notable to report in indirect tax legal hiring, which has always been a quieter market. Outside of this and the accountancy firms, we are left with the VAT compliance providers and tax software houses. We’ve seen the usual steady demand here, particularly for compliance specialists with multi-jurisdictional experience. This is nothing new; you’ll know from our reports by now that these profiles are always in demand and we expect this to continue throughout the year.

Stagnant in-house growth but opportunity still vast

The market for in-house recruitment, on a macro level, remained stubborn as we saw the number of indirect tax vacancies remain unchanged from Q4 with exactly 136 new roles and then a 6% drop in customs & global trade activity with a total of 183 new jobs. All of these reported vacancies were across the UK&I, BENELUX, and DACH markets only.

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Figure 1 gives you a regional breakdown of indirect tax, customs, and global trade hiring last quarter. As usual, the UK&I remains the most bullish in hiring whilst the DACH market has seen a decline compared to recent quarters.

The lion’s share of roles, as always, remained at the manager grade followed by the need for analysts. It’s worth noting that indirect tax saw a notable rise in senior manager vacancies across the board, which mirrored many of the conversations we had last quarter where directors and heads of taxes looked to identify their second-in-command. In the customs market, these ‘second-in-command’ roles are less prevalent but what we have been seeing are more businesses either investing in bringing in-house their customs capabilities and this has subsequently seen a rise in opportunities at the manager to senior manager grade.

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Manufacturing & Engineering appeared to be the most dominant recruiting sector (comprising of 12.5% and 15% of the market’s opportunities for indirect tax and customs respectively), followed by the pharmaceutical / meditech sector (9% and 9%). Perhaps most paradoxically, technology has been the noisiest sector this quarter as it stole the headlines for mass lay-offs yet we also saw a huge 17% of indirect tax roles being within the tech sector itself. One might be inclined to say this captures how bulletproof indirect tax is as a discipline but we have unfortunately been on the other end of the phone to many candidates that have been made redundant. Ultimately, it shows just how vast technology’ is as a sector with part of the market being hugely impacted certain events (ie. SVB collapse) whilst others continue to thrive.

And finally, Q1 has been a dominant quarter for in-house tax technology hires as we continue to see more and more businesses looking to transform and future-proof their tax function. The candidates who remain the most sought after are those with specific tax engine configuration experience (notable Onesource or Vertex) with strong SAP skills. 

Another buoyant quarter but a tough outlook for hiring managers

In summary, Q1 marked a busy start to the year for hiring with encouraging signs ahead for candidates. It was, however, one of the tougher quarters we can remember for hiring managers looking to recruit.

Why? Not only did the squeeze for indirect tax skills at the manager and senior manager grade get even tighter, but counter-offers were seemingly  more prevalent than previous quarters. This is something that the Harvey John team have not only observed from speaking to candidates and hiring companies, but also something that we’ve seen first-hand. Personally speaking, I’ve seen more counter-offers with my candidates in the past 6 months than any other period of my career. At the same time, it’s been counter-offers that have led to me registering far more new clients than my typical average per quarter.

My advice to candidates considering a move has always been to ask themselves the following questions: what can I do to influence the change I want to see in my role? No matter what your motive is to explore the job market – whether that’s more money, more progression, more flexibility, more interesting responsibilities – what have you done personally to try and achieve this? Have you expressed your concerns with your manager and given them the opportunity to rectify these concerns?

If the answer is ‘no’, then do it. Don’t sit around and wait for change; you could save yourself a huge amount of time (and grace with prospective employers) by exploring your options fully before you hand in that resignation letter. Not only this, but if you’ve given your employer the chance to rectify your concerns and you’re told that these expectations can’t be met, then you can explore the job market with a clear conscience and know that any counter-offer that’s subsequently made is not flattering, but an insult. 

As we look ahead to Q2 – and the squeeze for candidates tightens – counter-offers are unlikely to disappear. Whilst candidates must remember that shy kids don’t get any sweets’, hiring managers must realise that they’re recruiting in a market where they don’t hold the cards and they must really nail that value proposition when engaging with prospective employees.

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