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For many in IT contracting, 2001 was the end of a dream. Prior to the dot-com bust and before the Millennium Bug proved toothless, job boards had more positions than you could happily surf during lunchtime, and payments leapt higher at every contract renewal. Then disaster. Rates plummeted, positions were shed, IR35 bit into profits and long-time contractors with more skills than a peregrine crossing a wind farm found themselves with long periods between contracts and rates that put their careers back 15 years. But are we in line for another boom? Some contractors on the CUK bulletin board are bullish about the market, and for the first time in six years there is rising optimism and even hesitant reports of record rates. Bulletin boarder Francko initially raised the issue even though he was permanent at the time: "I think there is a lot of work going around these days. Perhaps close to what it was before the 2000 boom." And Doug Twistner, contract business analyst, says, "I hit my best rate ever this year. My previous best rate was at the end of a five-year contract, I don't think I had a rate increase in that last year though, which means I peaked at the end of 2001." From talking to recruitment agents, it seems certain Francko and Twistner's observations are being reflected across the industry. Jeff Brooks, chairman Recruitment and Employment Confederation (REC) and chairman of agency Prime Sourcing, says, "Some contractors are doing very nicely, thank you. It's looking good for contractors." Yet Brooks really does mean "some" contractors. He believes the market has been split between highly paid consultants and business analysts, and other IT contractors that are just ticking along – albeit, "quite nicely." Francko, notes this disparity, "By looking at the salaries advertised, companies are failing to recognise that when the market is strong they have to pay more. Despite the huge number of jobs, salaries are stagnating to a little more than what they were in the recession years." The question is; will the market improve for all, or just the specialised few? There are several conflicting pressures. For one, outsourcing has become a mainstream activity and a serious competitor to contract positions. This partly accounts for the subdued growth and low rates for the technical end of the contracting market. And even though Brooks believes the tide is turning on the wave of offshoring, it can still be cheaper to import foreign technologists to the UK. "At my previous [UK-based] client the entire test team was Indian. Several of our team were Indian. Many projects were gradually outsourced to India, or to contractors from India. Maybe half the work was outsourced," says Fungus, another CUK bulletin boarder. Yet even though Brooks agrees that the UK is hosting many overseas contractors, REC's members are finding it hard to fill positions, demonstrating a current, and growing, skills shortage. Ann Swain, chief executive for the Association of Technology Staffing Companies (ATSCo), explains another reason markets have been slow to pick up: the boom years of the late nineties caused a dramatic change in how companies recruited contractors. Until then, contractor costs were "almost accidental," but the huge bills were ultimately noticed by professional procurement departments, and they wanted control of such large outgoings. "Procurement [departments] tried to make contractor recruitment much cheaper, for good commercial reasons," she says. Fees were knocked down and it became much more difficult to supply, she adds. "Sometimes it's just not worth the bother of fighting procurement." These measures on the client’s side have kept agency fees and contractor rates suppressed, but times are changing. Swain believes the private sector is now ready to invest in new technologies, and the technology vendors are ramping up new offerings. "Rates will rise," Ms Swain said in an interview with Contractor UK, "which is good news for agencies and for contractors." Yet things could have been much worse. In 1999 the public sector employed just 10 per cent of all independent IT contractors – but today that figure has leapt to 26 per cent, according to figures provided by ATSCo. Whether it appeals to your politics or not, the Blair government's public sector spending has supported contractors through some lean years and without it, many more freelance IT professionals could have had a rough ride. Of course, we cannot tell how Gordon Brown will control the situation if he becomes prime minister. Accounting for a quarter of jobbing contractors, the public sector may yet be the Achilles' heel of any return to the glory days. William Knight Jul 26, 2006 Email this article Printer friendly page Previous Page
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