Growth in IT contractor demand inched up in January

A prediction to ContractorUK in last year’s third quarter that growth in demand for IT contractors would cool in December 2014 but recover in New Year 2015 has rang true.

In fact, according to the latest Report on Jobs, the index for temporary IT/Computing workers rose in January to 62.6, from 62.4 in December - the month when it slightly fell (from 63.3).

These fluctuations in IT contractor demand were foreseen in November 2014 by Michael Bennett, a director at IT staffing agency ReThink Recruitment. He told CUK at the time:

“While we expect activity in December to take the traditional trajectory this year and drop due to the holiday season, we expect it will pick up again in January”.

Another prospect he spoke of -- IT contractor demand in early 2015 potentially surpassing its then-current level (63.3 according to Report on Jobs), is still only a prospect however.

He is not alone in trying to differentiate between the two years. In Report on Jobs, published on Thursday, it says that “many workers should feel better off in 2015 than they did in 2014.”

This view is Kevin Green’s, chief executive of the Recruitment & Employment Confederation, and is based on record hiring but falling inflation and candidate availability.

“[Yet] the rate of growth in placements is beginning to ease,” he said, also referring to the jobs market as a whole. “The pressure of skills shortages is benefitting new hires via more generous pay offers”.

It’s also benefitting contractors. Specifically, although it was noted in a non-IT specific part of the report, the REC says that rates rose in January “frequently” because of skills shortages.

In the IT market, the expertise in shortest supply on a temporary basis is Business Analysis, Business Intelligence, Java, .Net, SAP, and SQL Server, the report says.

These six IT skills were also scarce in January on a permanent basis, in addition to four others – development, video game technology, web technology and PHP.

Although the report hints that end-users are willing to pay a premium to secure such sought-after skills, it says that the uptick in contractors’ rates was the weakest in nine months.

KPMG’s Bernard Brown reflected: “[Clients] will reach a point where they cannot afford to keep throwing money at candidates, no matter how much their skills are in demand.

“We are some way off this happening, but if [it] does, candidates who are in demand today might find it harder to knock doors down tomorrow.”

Elsewhere in the report, it says the availability of contractors (not just in IT) declined in January, albeit by the smallest margin for 11 months. It adds that recruiters serving the London market experienced the fastest drop in the availability of such contractors.