At the end of last year, we noted a significant decrease in I.T. contractor rates
Specifically, itjobswatch.com reported that they had monitored slippage of nearly 10%
over the previous six months.
Yet there have been several reports throughout the I.T. industry that these economic uncertainties may actually help I.T. contract rates
. The theory was that both permanent staff and contractors alike would be less willing to switch jobs, meaning employers needed to pay more to get people moving.
In part this may have contributed to a healthy rise in rates
over the winter months.
Hourly pay for the ten most commonly requested IT contract roles has leapt from £30.36 in December 2007 to £39.44 today. This is a staggering rise of 30%
. But, before contractors go to their bosses and demand a third more money, there are some caveats. (Source: Contractor UK).
This figure has been misleading somewhat by the re-emergence of architects
(averaging £38.36 per hour) and SAP consultants
(on a hefty £82.63) in the top ten. They enter at the expense of support analysts
(£18.55) and C# developers
(£34.29). (Source Contractor UK)
But the upward movement is still ongoing. Eight of the top ten remained the same over winter, and of these, six have seen rates increase.
Only .net developers
(from £33.44 to £ 31.90) and the generic ‘analysts’
(£20.25 to £20.14) have gone the wrong way. Perhaps most encouraging news is that business analysts
(£31.05 to £39.10) and project managers
(£36.79 to £39.78) have seen the healthiest growth.
The former group tends to be the first hired when a company looks at the viability of new projects; the second group then leads the work. An upsurge in their rates is good news for I.T. contractors as a whole. It is also a pleasant contradiction to a recent PM3 report
suggesting that ‘fees charged by top consultants have dipped by as much as £300 per day’.
Further contradictions can be found in the finance industry.
In the same month that the headhunting specialists (Heidrick & Struggles) released figures suggesting that investment banks have globally cut IT staff by 5% to 20%, ATSCo
reported an 11% rise in pay for it contractors in the finance industry over the last six months.
However, it’s a rise that was needed following previous dips.
If viewed over 12 months, hourly rates for IT contractors in finance have actually fallen by almost 11%,
from £30 to £26.68. In effect, the surge over the last six month has just put things back to their position of a year ago. The recent good news may come as a surprise to those expecting gloom from the money men hit by credit crunches and sub-prime debt write-offs.
But Ann Swain
, ATSCo’s chief executive, suggests that this uncertainty may even aid IT contract rates. ‘Banks,’ she says, ‘may look to mitigate employment costs by putting a freeze on permanent hires, which often creates more opportunities for contract workers.’ But this is unlikely to continue. Contractors may fill temporary gaps, but if money is being withdrawn from IT budgets, they’re likely to feel the pinch eventually.
Only longer term investments are likely to keep contractors in clover over the coming 12 to 18 months, but Swain offers some hope here too. ‘Retail banks
are continuing to spend on e-banking
and web security
at a healthy rate,’ she says, ‘and regulatory spending on compliance is already feeding through to demand for IT skills in the insurance sector.’ There is some comfort for those in investment banks
too, with Swain claiming that, ‘strong demand for IT skills in equities and commodities trading is helping to pick up some of the slack on the credit side.’
(FT Columnist, Government Advisor and IT Market Commentator) has been advising Jenrick CPI
, and in a recent meeting suggested that more organisations are now ‘IT Centric’
– “whether they like it or not” - compared to the last recession. This coupled with lessons learned from previous downturns leads McCormack to the conclusion that organisations that follow the lead of a certain investment bank “will continue to invest in their IT Infrastructure
and encourage innovation
to leave them better placed when the cycle goes into the upward curve again...” As a result he is advising that IT contractor rates will remain fairly stable
for the remainder of 2008.
A similar opinion upheld by the Employment Outlook Survey
(Published 10/06/08) which found that 12% of employers in the finance and business services sector plan to increase overall headcount levels
in the third quarter of this year by as much as 5%
on the previous quarter. According to the survey some of the key areas for continued investment by employers are: IT, Data Management, Media, Technical Innovation and communications.
This market snapshot indicates that demand and market rates for IT contractors has increased in 20 out of the 30
most popular industries with only 9 showing a decrease and 1 remaining unchanged.
In both IT Permanent and Contract demand, Pharmaceuticals
is one of the industries which is positive in both, showing a significant increase in demand from the same period last year.
and South UK
show the biggest increase for both demand and market rates.