Hiring of IT contractors returned to growth in May 2026, following 33 months ‘in the red’

Hiring of IT contractors grew in May 2026 for the first time in more than two-and-a-half years, according to REC data obtained by ContractorUK.

The return to growth for temporary technology roles after 33 consecutive months ‘in the red’ reflects demand from “projects around Automation, AI, Cloud and Cyber Security,” says VIQU IT. 

Even where May’s ‘many newly released budgets’ didn’t cover IT contractors (VIQU IT’s Matt Collingwood), firms “run out of road on delayed projects,” another recruiter, Bowers Partnership, told ContractorUK.

How is UK employer confidence?

The first growth in IT contractor demand since August 2023 is also due to ‘ongoing global and domestic uncertainty, making businesses more cautious’ about hiring full-time technologists.

While far from all, “some employers” in May therefore began “turning to temporary contracts to retain flexibility,” added KPMG group chief executive and UK senior partner Jon Holt.

Are we in a tight or loose labour market?

Or as Rupert Ronca, formerly of Matchtech, a recruitment agency with an IT unit, puts it:

“Businesses are pulling back, sitting on their hands, waiting to see what happens with the war in Iran, domestic political noise, and the ongoing cost pressures from the NI changes that are still working their way through.

“What's interesting, though, is what's filling the gap. Temporary billings grew at the fastest rate in over three years. 

“When businesses can't commit to permanent headcount, they're keeping the wheels turning with flexible resource instead. That's not a sign of confidence, it's a sign of managed uncertainty.”

Is demand for temporary staff in the UK growing?

Neil Carberry of the Recruitment and Employment Confederation (REC) confirmed that Report on Jobs shows May 2026 saw the fastest growth rate for temps, as a whole, for three-plus years.

Employers were “tapping the brakes on permanent hiring in the face of higher costs, the Gulf crisis and new employment red tape,” Mr Carberry said.

Are employers prioritising workforce flexibility?

To Hardeep Singh, an interim professional, the tapping opens up an opportunity.

He shared: “From where I sit in the interim and consulting space, this reinforces a clear trend: organisations are prioritising workforce flexibility over long-term headcount commitment.

“When macro conditions are uncertain, decision-makers reach for contractors and interims — people who can hit the ground running, deliver transformation outcomes, and exit cleanly.

“That’s not a signal to be alarmed about. For experienced interim professionals, it’s an opportunity.”

What are the advantages of turning to temporary and interim workers?

James Smith, a regional director at Workforce Staffing, said of May 2026: “With ongoing economic uncertainty, it's no surprise that many businesses are turning to temporary workers to give them the flexibility to react to changing demands, manage costs and keep operations moving.

“[Organisations] are being more selective about where they invest.[So] rather than large-scale hiring, businesses are focusing on critical roles and key individuals who can add real value to their organisation.”

What are some top tips for jobless IT contractors?

Asked by ContractorUK what individuals should do, where they have IT skills, feel like they add value, but are ‘on the bench,’ Bowers Partnership recommended:

“For IT contractors who have been on the bench, I’d say be visible, be specific, and be very clear about what you, personally, delivered,” founder Natalie Bowers began in a statement last night.

“Clients are interested in what you did — not just what the team did or what the project was about!

“So, use ‘I’ wherever possible at the moment, lead with outcomes and make sure your CV looks current. If it still looks like a 90s text document, give it a full refresh before sending!”

Does growth in IT contracting equate to an IT contracting boom?

The top tips from Bowers, who recruits IT contractors for London’s Square Mile, are all the more important because growth doesn’t mean “boom.”

According to the REC data obtained by ContractorUK, demand for contract IT/Technology skills climbed to 50.3 in May (on a scale where 50.0 signals growth), up from 47.2 in April.

“Across Investment and Wealth Management, companies have held back on spend…but Cloud, Cyber, Data, AI, Infrastructureand Platform Change can only be paused for so long.

“But I wouldn’t call it a ‘contractor boom,’” the Bowers Partnership founder said. “It’s still cautious, targeted.”

Is the IT contractor jobs market in mid-2026 as strong as it was back in 2022?

Optimism about how the IT contractor jobs market is shaping up should not be mistaken for a return to 2022, reinforces tech recruiter Matt Collingwood.

“May 2026 was another good month, and we’ve seen our contract book continue to grow month-on-month since the start of the year.

“But don’t get me wrong, I don’t think we’re heading back to boom times,” VIQU IT’s managing director told ContractorUK.

What four technology areas are creating jobs for IT contractors?

He added: “At many employers, there just hasn’t been enough investment in these four areas [Automation, AI, Cloud & Cyber Security]. And they’re now reaching the point where they need to improve efficiencies and drive down costs.

“We spend a lot of time talking to clients about their plans, and we’ve got good visibility of a number of projects coming down the line. So there’s definitely some positive spending activity taking place.”

What’s IT contractor demand forecast to be for the rest of 2026?

To put that ‘positive spending activity’ into context, Mr Collingwood said that, for IT contractor demand in the second half of 2026, it could lead to “slow and steady growth.”

At the REC, Mr Carberry confirmed the ‘not out of the woods’ sentiment despite IT contractor demand finally now growing, by citing “multiple reasons for increased uncertainty.”

How is the UK jobs market faring overall in mid-2026?

“The clearest story in the economy right now is momentum being held up by uncertainty,” Mr Carberry said.

“[So] thank goodness for the flexible choices that a UK employer has to create work for people. This is why, [as a government], you shouldn't mess with temp and contract work.”

A re-designer of global organisations for the AI age, Tess Hilson-Greener, says the REC boss’s one-liner about ‘momentum being held up by uncertainty’ is more informative than the myriad of headlines about the UK jobs market.

Hilson-Greener took to LinkedIn: “Permanent hiring in the UK has now been falling for almost four years, yet organisations continue to invest in transformation, AI, productivity programmes and operating model redesign.

“This is not simply a hiring slowdown. It is a shift in how organisations acquire capability.

“Many employers appear reluctant to commit to permanent headcount while navigating economic uncertainty, rising employment costs, technological change and evolving workforce expectations.”

What will a shift in how companies acquire capability lead to?

Hilson-Greener said among the results of the “shift” were likely to be “more contingent workforces” and “greater use of specialist contractors.”

However, the government has much to answer for in terms of ‘push’ factors, according to a senior partner at EOS IM Group, Giuseppe La Loggia, who was previously a self-employed individual.

“Rising costs explain part of it; policy explains the rest,” he posted. “As the government restricts zero-hours arrangements and loads more risk onto taking someone on permanently, it changes the calculation behind every lasting role.”

What parts of government policy are affecting the UK labour market?

The REC’s Neil Carberry agrees that the government’s actions — and inactions — play a significant role. In a combination of posts, threads, and in Report on Jobs, he argued:

“The jobs market [in May showed us]…where temporary work comes into its own.

“It emphasises again the risk… of getting Employment Rights Act implementation wrong and regulating people out of work, to everyone's loss, especially on new zero hours rules.

“Recognising this and backing our well-regulated temporary and contract workforce should be a priority for government, starting with [it making] big changes to the [proposed] approach to zero hours”.

A semi-retired Change Management consultant is already looking at a few years down the line, which he thinks businesses may be doing too — in what could represent another potential engine of contractor demand.

What is the hope about a future government?

The consultant, Mark Cameron, argued in a thread: “The current government has about three years left, after that I'm guessing unless a miracle happens they'll be gone.

“So I'm also guessing businesses are now thinking this and using temporary staff to plug the gap, hoping any future government will be more business-friendly. Then they'll invest and hire more. If that doesn't happen, they don't have the burden of permanent staff with their new employees' rights hanging around their necks.”

How many tech skills are in short supply in the UK?

In both the permanent and temporary technology skills markets in May 2026, nine technologists were in “short supply,” according to the REC.

The nine were; AI/ML Engineers, Cyber Security, IT Infrastructure, Senior IT Developers, Software Developers, Software, Technology, IT and Technical Roles.

What IT skills were hard to come by in May 2026?

The permanent IT jobs market was also short of Cloud Engineers, CNC, Data Engineers, IT/Software Sales, IT Procurement Specialists, SMT Engineers and Software Architects.

REC member agencies added that the IT contractor jobs market in May 2026 was uniquely scarce of AI/ML Developers, Domain Specialists and Software Engineers.