IT contractor demand cooled in December 2023 to a 41-month low

Slight progress that the IT contractor jobs market made in the third quarter of 2023 fizzled out in December.

According to the REC, demand for IT contractors fell last month to 45.5, down from 49.2 in November and 48.0 in October.

Any score less than 50.0 means the temporary IT market is shrinking, but 45.5 is the lowest score since July 2020.

So IT contractor demand was weaker in December -- a uniquely short hiring month, than at any other time in 2023, 2022 or 2021.

'Ongoing pressure on budgets'

Businesses facing “ongoing pressure” on their budgets was to blame for the temporary hiring dip, said KPMG’s new head of skills, productivity and education Justine Andrew.

ContractorUK Forum posts suggest more than just a softness, indicating that a seasonal slowdown could be only part of the problem.

One post (albeit from late November) talks of trying to “pinpoint” why the IT contractor market has tanked.

Another, in later November and by a Scala contractor talks of two or three calls a day from agents now being more like two a month.

A third post talks of a 15% day rate cut by a bank, but the contractor makes clear that it’s for him individually, not across the board.

'Not dead and not bad'

The rate cut post is dated December 4th 2023 – the period covered by the Recruitment & Employment Confederation’s latest data.

“December…[is] always quieter on the hiring front,” reassures REC’s deputy CEO Kate Shoesmith, speaking after the report’s publication.

“What we’ve been hearing [is that December 2023 was] quiet in comparison [to other 2023 months]. As [hiring] always is at that time of year -- but not dead and not bad.”

'Firms lean on temps in uncertain times'

The REC’s CEO Neil Carberry also spoke after the report, which he used to say that skills, regulation, and immigration must be addressed at Spring Budget 2024 on March 6th.

“This is only the third contracting month since the pandemic recovery started, and all of them have been weak contractions,” Carberry contextualised online.

“[The overall labour] market is still operating at a high level, as firms lean on temp in uncertain times.”

He evidenced his claim of temps being relied on as ‘starting rates continue to grow,’ with “relatively strong” pay offers “historically, but…far below the levels since in the last 18 months.”

'Salaries seem to be the same as five years ago'

ContractorUK readers are watching full-time IT positions too, to see if starting salaries can compete, but as one contractor said yesterday:

“Perm position salaries seem to be either same as what they were five years ago or even dropping. No idea how that's possible, considering how much more expensive life is now.”

Clients are still offering premiums to the right candidates however, even if one candidate probably won’t ever know that extra money was put on the table specifically for him.  

'The people interviewing him didn't seem to show enough interest'

“‘I'm withdrawing my interest in the position.’ [These are] words no recruiter likes to hear,” began agent Isaac Levet.

“I received this from a candidate who was interviewing with a client of mine. When I asked why, I was surprised to find out it didn’t have anything to do with the salary range, benefit offering, location or any of the usual reasons people turn down job offers.

“It was because the people interviewing him didn’t seem to show enough interest. When the final interview finally happened, [he] felt it was a bit rushed, and didn’t feel like…much of a priority.

“My client was prepared to make an offer, with a higher salary than requested,” revealed Levet, principal recruiter at Jobot. “But that doesn’t always matter, if people don't feel valued.”

'More job-search activity'

The candidate now adds to the already large volume of individuals looking for something new -- which traditionally peaks in the New Year following December’s lull.

“As employers reshape and inflation bites, we are seeing more job-search activity,” the REC’s Mr Carberry said on Monday.

“Candidate availability [is] continuing to rise; this seems to be a relatively steady trend, with limited fluctuation.”

'In short supply'

But not for all candidates.

In the IT contractor market, December saw a scarcity of nine temporary tech candidates.

The nine were; Automation Testers, Data Engineers, Developers, Senior Technical workers, Technical Leaders, Technical Solutions Architects and those skilled in Technology, IT and Cyber Security.

REC member companies hiring for full-time positions also reported 11 tech candidates “in short supply.”

The 11 were; Cloud Engineers, Data Engineers, Developers, DevOps IT Engineers, Senior IT Engineers, Software Architects, Software Engineers, Technical Leaders and those skilled in Cyber Security and IT/Technology.

'2,358 technology job layoffs already in 2024'

But since December 2023, some 13 technology companies have axed a total of 2,358 technology staff, according to Layoffs.fyi.

That compares extremely favourably to this time last year -- when Big Tech’s lay-offs started in earnest, with 278 companies axing 89,809 techies in January 2023 alone.

Last week, tech leader and career coach Adam Broda reflected: “Some of the biggest, most reputable, and highest-paying firms cut thousands of people [overnight last year].”

He advised: “[So] let 2023 be a reminder before you…push yourself so hard you burn out; work those extra weekends to deliver; [or] answer those 11PM slack messages.

“Your performance, even if it’s top tier, can all become irrelevant in the blink of an eye. Companies will protect themselves first, therefore [workers] must do the same. And that’s okay.”