Big turnaround in IT contractors’ job prospects detected in March 2024

A turnaround of significant proportions has been seen in the IT contractor jobs market -- but in March it only began brewing.

Instead, March 2024 was likely “the bottom of this downturn” says Kate Shoesmith, deputy CEO of the REC, which publishes Report on Jobs.

Demand for IT contractors in March fits the narrative of going down to come up -- it came in at 45.0, the report says, versus 45.4 a month ago.

That means appetite for contract IT skills fell (for the second month in a row), but the margin of decline was a tiny 0.4 of a single index point.

The decline looks even more like a moderation when set against contract IT demand in February, given it sank to 45.4 from 46.2 in January.

'Holding pattern'

The March data signalling the nadir must now have been reached coincides with new ‘optimism about the outlook improving’ -- KPMG’s Jon Holt, and hirers in a “holding pattern waiting for inflation and interest rates to ease” so they can “get to investing” in people again -- REC’s Neil Carberry.

But granular data also indicates April 2024 is primed to end seven months in a row of IT contractor demand being ‘in the red’ (IT contractor demand hasn’t grown since August 2023).

And it’s not just granular data from the REC’s member agencies like that showing new opportunities falling but “at a relatively slow pace,” or that showing pay rates “reacting” to the optimism by “rising.”

It’s granular data from individual agencies outside the group, too.

'Twenty-three per cent rise in future starters'

VIQU, for example, which specialises in IT contractor placements, says its forecast for ‘future starters’ emerged in March 2024 as the brightest for almost two years.

“Looking at our future…contractors, [those] on assignment will grow [in volume] by 23% between January 2024 and May 2024,” says VIQU’s Matt Collingwood, who writes today exclusively for ContractorUK.

“This is the biggest growth period for us since May 2022,” he added, specifying ‘future starters’ are IT contractors who have undergone assessment/interview and are due to start with a client in the future.

VIQU’s “pipeline” looks similarly buoyant, based on the tech staffing business looking specifically at incoming projects which will soon require IT contractors.

'Challenging, but on the up'

“After a challenging 18 months for tech contractors, the sector seems to be on the up,” Collingwood says.

“As someone who's witnessed the ebb and flow of tech recruitment over nearly three decades, I'm encouraged by the [figures and forecasts we’ve uncovered].”

Experis, an IT project staff agency, says just under one third of UK technology employers plans to increase headcount between April and June 2024.

'Driving new expertise'

“Hiring plans for the UK IT sector sit just behind the global average,” said the agency, following a March 2024 survey of its clients.

“Thirty-eight per cent of IT businesses report this hiring demand is driven by technological advancements, driving new expertise.”

Less positively, Experis found that more than seven in 10 employers report “difficulty” sourcing candidates with the tech skills that they need.

'Consumer confidence'

At the REC, Mr Carberry took to LinkedIn after the confederation’s report, posting: “In other areas, particularly engineering, demand remains high, emphasising the importance of a new approach to skills from governments across the UK, led by reform of the Apprenticeship Levy.

“[And a March] uptick in the need for blue collar staff may be a sign of consumer confidence starting to return -- but it also emphasises again how labour shortages may constrain growth when it returns.”

Also last month, the IT/Computing candidates in “short supply” for permanent positions were numerous.

They were; AI Developers, CAD, Cyber Security, DDaT, Developers, Infrastructure, LLM Engineers, ML Engineers, Software Architects, Software Engineers, Technical Roles and Technology/IT.

Five of those tech skills were scarce on a contract basis too -- Cyber Security, Development, Software Engineering, “Technical Roles” and “Technology /IT.”

'We've hit the bottom'

Report on Jobs also lists three further IT contractors as being hard to source; Analysts, Automation Testers, and Data Engineers.

“It's a tough market,” reflects the REC’s Ms Shoesmith. “But it's a long way off the worst. And this [report for March 2024] reads like we've hit the bottom of this downturn.”

Uploading an infamous scene of refusal from black comedy heist thriller Sexy Beast, where a retired hitman (Ray Winstone) is repeatedly badgered “Do the job,” but repeatedly refuses, Forge Talent consultant Joe Roberts signalled the pendulum of demand has already swung back to at least one candidate -- much as Roberts was trying to swing it back to himself.

 “When you come across an absolute worldie of a candidate,” Roberts mused to a gif of the scene (‘Do the Job’-‘No’…‘Yes’-‘No’ ‘Yes’-‘No’ ‘I can’t’-‘You can’). “But you are too late to the party, and they’ve already secured a new role.”