Demand for IT contractors stopped losing ground in November 2023

Demand for IT contractors in the UK stopped losing ground in November 2023, as somewhat expected.

The improvement in IT contractors’ prospects to 49.2 from 48.0 in October represents their first uplift in still-negative growth since September.  

Produced by the REC, the figures indicate IT contractors defied the overall trend in November, as the average temp and full-time worker both saw demand slip further into negative territory.

Reining in hiring'

REC’s Neil Carberry spoke of the ‘same story’ as prior months for these two non-sector-specific staff, but also last month, “firms” opted to “move [their hiring] activity in 2024”.

Should firms want to kick off projects in the New Year and have the necessary IT contractors -- workers often on three-month contracts, November would be the natural time to hire them.

But in the REC’s Report on Jobs, co-author KPMG said November 2023 saw “employers… reining in hiring”.

And that applies to IT contractors, as appetite for tech skills on a temp basis remains ‘in the red,’ even though the rate of decline has slowed to the smallest since September.

'In short supply'

The Recruitment & Employment Confederation (REC) advises that any score below 50.0 indicates that demand failed to grow on the previous month.

Yet this winter, some tech candidates won’t feel out in the cold -- and not just because if they’re freelance their demand-score (49.2), is on the cusp of growth anyway.

In particular, six technology candidates were “in short supply” in November according to the REC’s recruitment agency members, on both a full-time and freelance basis.

The six are; Cyber Security, Developers, Senior IT Engineers, IT, Technology, and Technical Support.

'Fall in remote and hybrid tech postings'

But a separate jobs report signals that these six, like many other tech roles, might be losing their ‘hybrid’ edge.

“Tech occupations have seen falls in remote/hybrid postings shares over the past six months,” says the latest UK jobs and hiring report by Indeed.com.

“[Similarly], the share of UK job postings mentioning ‘remote’ or ‘hybrid’…has dipped from 16.3% in early May to 14.4%, as of the end of October, but remains over three times higher than before the pandemic.”

'Rebalancing'

The job site’s Jack Kennedy says the UK labour market was “piping hot” in 2022 as it came out of the pandemic on pent-up demand, but “has spent much of 2023 slowly coming off the boil.”

Indeed’s UK economist, Mr Kennedy added: “The rebalancing of labour demand and labour supply is ongoing, as vacancies drift down from peaks and labour participation recovers from the pandemic.

“That means hiring conditions are set to remain somewhat challenging, particularly in lower-paid sectors…experiencing persistent staff shortages post-pandemic and post-Brexit. It also means candidates are likely to retain some leverage around pay and conditions.”

In the REC’s Report on Jobs, though, the signs are that the former (pay), if not the latter (conditions), is starting to ease where increases are concerned.

'Redundancies, restructuring'

As well as KPMG’s Claire Warnes saying November saw employers “continuing with redundancies in response to the sustained economic slowdown,” Mr Carberry issued a near-warning to candidates pinning their hopes on a big rate rise in early 2024.

“As employers restructure, candidate availability is now rising strongly…[meaning] wage rises are also slowing,” he began.

“While [the rises are] at strong levels in the historical context, this month’s numbers for both temp and perm are the weakest since March 2021.

“We should expect this trend to continue as large 2023 pay settlements and higher inflation flow out of the system in 2024.”

'Pay is going up'

The REC’s deputy-CEO Kate Shoesmith reflected: “Starting salaries for new permanent placements increased at a slower rate. For temp billings, wage rates also increased more slowly than before.

“That's the important distinction - pay is going up but not as quickly as before. For both perm and temp pay, it was the slowest rate of increase in nearly 3 years.

“This shouldn't be a surprise - the market has been shifting for many months. Both perm and temp placement rates dropped into negative territory overall last month, compared with the month before.”  

'AI developers'

Pay premiums will be attached to those skills which are scarce, and in November, among techies, there were seven applicants and four contractor-candidates who were hard to find.

The seven applicants uniquely scarce to the full-time IT market were AI Developers; Data Professionals, DevOps IT Engineers; Software Designers, Software Engineers and those skilled in IT infrastructure, and Digital.

The four skills uniquely scarce to IT contracts were Network SDN; Date Engineering, Data Centre Network and IT Helpdesk support.

'Check profiles'

IT Helpdesk Support being scarce for contracts, and Technical Support being scarce for both contracts and full-time positions, might explain one CIO candidate’s unwelcome email.

“Got emailed today about a potential new role by [name of agency], and the role is for a Service Desk Analyst [to provide tech support]. As an Interim CIO, I have to respectfully decline.”

The senior-level candidate added: “Maybe the team at [named agency] would like to check profiles before sending such emails. I have emailed [them three] times now over recent months, advising them to maybe review my profile yet they take no notice”.

'Odd hiring month'

Rather than the agency’s incompetence, it might be that the CIO candidate received the email (early last week) simply because December is an “odd hiring month.”

On LinkedIn, Simon Gee, managing partner at executive search firm HR&S explained his assessment: “December is an odd month from a business perspective. 
 
“New business, in general, can be a little slower. And for many recruiters, including me, it's a chance to get deals closed off that are coming to a head. 
 
“But beyond that, you [candidates] shouldn't look at it as a write-off. In fact, it's a great time to get prepared and start new processes so you can hit the ground running in January.”

'Employers are getting more confident'

And according to Mr Carberry, decision-makers are already doing the same.

Also going online, albeit to draw on November’s findings from the REC, he wrote: “It's been a long year, and we are getting a lot of feedback from members about activity being shelved into 2024.

“That would tie nicely with our Jobs Outlook [report]] finding that employers are getting more confident. Recruitment is first in and first out to slowdowns -- so we might expect an uptick in the spring based on this feedback.”