Why IT contractor demand is set for continued growth

As a skills crisis in the UK takes hold, the recruitment industry is facilitating higher levels of contractor placements within the IT sector, ensuring the continuation of a vital talent pipeline for businesses that are struggling to attract and retain talent, writes David Geary, policy adviser to the Recruitment & Employment Confederation (REC).

We have witnessed a steady upward trend in demand for temporary professionals within the IT sector over the last two years. Despite a slight slowdown in the rate of IT contractor demand in the last few months of 2014, which is likely related to the season, we anticipate that demand will continue to grow in this sector throughout the remainder of 2015.

Third of clients need more workers, half want more workers via agencies

As to why we foresee this continued growth for IT contractors, the REC’s JobsOutlook offers some answers. The January 2015 survey found that 35 per cent of businesses are operating with ‘no spare capacity’ to take on more work without more personnel. Compare this finding with January 2014, when just 25 per cent of respondents reported having no spare capacity.

This points to additional pressures on businesses at present, and with stretched workforces unable to meet rising demand, end-clients will have to consider increasing their labour resources if they are to take advantage of the positive economic climate in 2015.

In the same report, almost half of respondents stated they intend to hire recruitment agency-supplied workers between April and December 2015, with ‘access to short term skills’ cited as the primary reason.

Agencies report stubborn IT candidate shortages

But the acute lack of available talent to fill roles in the IT sector is a cause for concern, for end-clients as well as their recruiters. Just look at our Report on Jobs, which asks recruiters about the demand for and availability of candidates in a variety of sectors. Well over the last year, .Net featured as a skill in short supply for ten of the previous 12 months; Java featured in nine of the 12 months and SQL featured in the last eight of the 12 months. So IT contractors with these skills - and indeed many other ones too - are in a strong position to negotiate rate levels with their recruiter and/or client, assuming the end-client is in need of their particular skill-set.

It is not the first time that IT contractors possessing skills that are generally scarce in the market stand to benefit. But in the long-term, the bigger picture is that skill shortages restrain and stifle growth within the IT sector; they make the UK less attractive to foreign investors and undermine our global competitiveness.

The problems shortages cause and the solutions we support   

That’s why in our recently published ‘Manifesto for Jobs’, one of the priority areas identified for immediate government reform is to ensure that IT employers can obtain the necessary skills they need here -- in the UK. We also believe in championing temporary working, and will continue to highlight the increased  flexibility, pay and experience available to individuals who contract in IT. As freelancers and contractors will attest, temporary assignments can provide opportunities to gain new skills which can increase the chances of subsequently accessing higher level roles.

Four other IT contractor skills are sitting pretty

This upgrading effect is most pertinent now, as employers will this year be seeking out candidates with appropriate skills and experience in a market that has become exceptionally competitive. Candidates who are not already using a recruitment agency to source their next contract should consider doing so. The IT skills already mentioned, as well as Business Intelligence, Development, Business Analysis and E-Commerce, are increasingly in demand and candidates ready to supply expertise in these are well-placed to make competitive moves in 2015.

Editor's Note: Related Reading -

Hirers told IT talent is dissatisfied about pay

Contractors' Questions: How are daily IT rates faring in 2015?

Contractors' Questions: How much do the 10 hottest IT skills pay?