July billings show demand for IT contractors heading for a full year of no growth

Demand for IT contractors failed to grow in July 2024 despite the rate of decline slightly easing.

Measured by the Recruitment & Employment Confederation (REC), July’s demand for IT contractors of 44.6 is higher than June’s of 43.6.

But July 2024 represents the 11th month in a row of ‘in the red’ demand, as appetite for freelance tech skills hasn’t grown (50.0) for almost a year.

The last time IT contractor demand grew according to the REC was August 2023 (51.9).

'Subdued, with contracts not being renewed'

Jon Holt, chief executive of KMPG, which co-authors REC’s Report on Jobs, spoke last week of the UK labour market looking “subdued.”

Confidence to hire has “not yet returned,” which in the temporary market is why “worker contracts are not [being] renewed,” Holt says.

It may also be why IT contractors are adopting radical strategies to land work, given their work dried up in July for 11 months on the trot.

'Top tech companies get enough applicants within hours'

Google software engineer Sahil Gaba says the trick is to only apply for opportunities that have been live for less than 24 hours.

“Ninety-nine per cent of the interview calls I get are through directly applying on job portals,” Gaba says.
 
“But… I only apply to jobs that were posted in the last 24 hours. And I do this every single morning.”

The strategy works, he thinks, because “recruiters can only review so many applications,” and once they find a few solid ones, they stop.

“At top tech companies,” continued the ex-Amazon software engineer, “‘enough’ applications can flood in within hours. You want to be in that first wave of applicants.”

'Open to connecting for 20?'

Max Herman of Sprout Social recommends connecting with LinkedIn users who have the role you want, or whose job is related, at 30 desirable firms.

“Once they connect, send [your] first message [stating]…‘Hey ABC, love what's happening at XYZ, would love to learn what your experience has been like. Open to connecting for 20 to share thoughts?’”

Once on a call, says Herman -- cautioning of only a 10% response rate, “be curious; ask about environment, metrics, [management’s] priorities, struggles, etc.

“[Finally] before wrapping up, ask for a connection to the hiring manager. Or ask for a referral.”

'Just because it says 100 people have applied...'

Others are advising to take metrics with a pinch of salt.

“Just because it says ‘100 people have applied’ doesn't mean they actually have,” reassured Abu M, a recruiter.

“Some websites/platforms measure when someone clicks on a ‘apply now’ button even before they've actually applied. So they may not have actually sent their CV across.”

The recruiter recommended adding the hiring manager on LinkedIn, and even telephoning them direct, explaining:

“Call the company where you'd want to...[work] and just mention you've sent your CV across.

“[Say that] you know many people have applied but [that you] wanted to see if you could have a quick chat with the hiring manager.

“They might say ‘No Sorry,’ but they might put you through. It's not costing [you] anything [much]. Just [the price of a phone] call.”

'Interest rate cut to 5% a much-needed lift to businesses'

On August 1st 2024 – a date which fell after the REC collated its July data from member agencies, the Bank of England cut interest rates.

KMPG’s Jon Holt says the easing of rates (from 5.25% to 5%) will provide a “much-needed lift to businesses.”

Job board Indeed.com recently pointed to better-than-expected GDP figures for the UK in Q2, leading to growth upgrades for 2024 as a whole.

Goldman Sachs and Barclays for example say the UK could now grow 1.1%, and Deutsche Bank projects 1.2% growth over the same 12-month period.

'Live job postings close to pre-pandemic levels'

Indeed’s economist Jack Kennedy says the GDP uptick is only a “relatively modest sign” of progress, however.

The job board says live postings (as of July 19th 2024) across its platform stabilised at “close to pre-pandemic levels.”

REC’s deputy chief executive Kate Shoesmith is more upbeat.

Of the confederation’s data for the entire month of July 2024, she said employers are “emerging from the woods,” with a sense of “optimism for their businesses and the broader economy.”

'Don't jeopardise the temporary workforce'

Talking last week online (to her followers), Shoesmith said that set against the snap general election, the UK jobs market “held up ok.”

But reiterating the stance she made on Friday in a ContractorUK exclusive, the REC’s deputy CEO said the new Labour government must ensure its employment reforms are “both pro-worker and pro-business”.

The government must make sure the reforms, including to the Apprenticeship Levy, “don’t jeopardise the temporary workforce,” she said.

'July billings similar to June's'

Drilling down on temps, Shoesmith also said that for July overall, billings were “pretty much static – with a performance very similar to June.”

“Pay…is [now] steadying off,” she added, implying less availability of rate premiums.

“Just as the Bank of England wants to see. It's a fairly obvious reaction to inflation-busting pay rises as we came out of the pandemic, the cost-of-living crisis, and NMW rate increases.”

A fairly obvious reaction to the pool of freelance IT opportunities narrowing for 11 consecutive months is candidates embellishing their technical skills.

'More and more businesses using technical assessments'

Writing today for ContractorUK, in wake of candidate claiming confidence in MS Excel but then being unable to demonstrate the basics, tech staff agency boss Matt Collingwood isn’t surprised that the talking up of technical abilities is being exposed. 

“We’re seeing more and more businesses asking recruiters to facilitate technical assessments during the interview process, or handling them themselves internally,” Collingwood, boss at VIQU writes today.

“Contractors must expect to be challenged [on their skills] and asked for evidence”.

In July, REC member agencies said they were short of 14 technology applicants on a full-time basis, and 11 technology skills on a contract basis.

'Short supply'

The 14 were; Senior IT Engineer, Software, Software Developer, Software Engineers, Technical Roles, Technology, IT, AI Developers, Automation Testers, Cyber Security, Data Engineers, Data Scientists, Developers, and Full-Stack Developer.

The 11 technology roles in “short supply” for temporary contracts in July were; Analysts, Cyber Security, Data Engineers, Developers, IT, Java, Software, Software Developer, Technical Roles, Technology and “Technology Contractors.”

Asked how there can be such a long list of scarce tech skills at a time when demand for IT contractors is languishing in negative territory -- and has been for 11 months, an REC spokesperson clarified to ContractorUK:

“If the demand for staff index is below 50.0 it just means there are fewer vacancies than in the previous month, rather than there not being any at all.

“While demand [for IT contractors] has been falling, there will still be plenty of vacancies out there which need filling. And so that’s how you can have [numerous] skills in short supply at the same time as falling demand.”