IT contractor demand edged away from no longer growing in December 2022

IT contractor demand in the UK took a step back from the precipice of no longer growing in December 2022.

Following November’s 50.9 (the lowest demand-score of the year for IT contractors), appetite for them last month crept up to 51.9.

Published by the REC, the December score positions demand for IT contractors a small but significant 1.9 index points above what the staffing body calls the ‘growth threshold’ – 50.0.

The reading vindicates the REC’s prediction to ContractorUK that despite the dicey economy, well-paid technology workers who freelance will still be “actively sought” in 2023.   

'The big test'

But in the staffing body’s ‘Report on Jobs’ which contains the monthly index published last week, there is a warning:

“The big test of the labour market will come this month,” the report says, referring to January 2023.

December is atypical in recruitment partly due to the festive holidays making it a short month, but December 2022 also saw “high inflation and “economic uncertainty.”

'December hires pushed back to January'

Clearly hoping that those dual pressures will have eased by January 2023, organisations ‘pushed hiring activity back’ into the New Year, added REC chief executive Neil Carberry.

Truer hiring intentions may therefore be easier to gauge now, than last month, but strikes, plus staff scarcity “means wage inflation may soften only slightly,” says KMPG’s Claire Warnes.

Techies who specialise in software development will be among the best-sheltered from any pay premiums petering out, another report indicates.

'Software Developers pocketing 7.1%'

According to Indeed.com, software developers saw 7.1% year-on-year growth in their pay, representing an uptick of 2.1% on the prior quarter -- a bigger uptick than in nine other sectors.

The pay growth for software developers was measured in November 2022 (so a month before the REC’s latest data), and it was described in Indeed’s report as relating to “wages.”

But in a sign that permanent might not be too distinct from contract in the current climate, ‘Software’ and ‘Software Engineering’ were both scarce in December 2022 across the board.

'Short supply'

Similarly “in short supply” last month on both a full-time and contract basis was Analysis, Cyber Security, Data, Data Engineering, Development, and IT/Technology.

The member agencies of the Recruitment & Employment Confederation (REC) also reported shortages of applicants for positions requiring Data Science, Digital, and Infrastructure Analysis.