Eurozone crisis ‘saps IT contractor hiring confidence’

Contract workers are not immune to markedly more conservative recruitment policies being put in place by employers unsettled by the Eurozone crisis, with those in IT among the hardest hit.

Research for the Association of Professional Staffing Companies shows that 57,191 contracts were advertised on job boards this September, compared to 66, 340 last September.

Pointing to the dip (of 13%), APSCo said employers traditionally cut back on their contract, freelance and temporary resources in advance of cutting into their permanent workforce.

While full-time redundancies could therefore be yet to peak, it leads APSCo to expect that, currently, contractors will be “bearing a disproportionate number” of the job cuts.

Nowhere more so than in Banking and Insurance, where the stock of contracts plummeted by 34% - and in IT, where the contract pile shrunk 27% from 19, 328 to 14,175 this September. 

Partly the dip reflects contracting’s make-up, as the value of such freelancers to the economy derives from them being a flexible resource - “a tap that can be turned on and off very quickly”.

But the issue right now, added advisory Staffing Industry  Analysts, is that the banks and other IT contractor hirers are “turning the tap towards the ‘off’ position”.

APSCo’s Ann Swain, chief executive, reflected: “IT projects, particularly if they are not expected to deliver an immediate return on investment, can temporarily be put on ice and thawed out again once the outlook improves.

“In some cases, projects have been put into the deep freeze, allowing a reduction in contractor numbers.”

It has also permitted some end-users to impose a two-week mandatory holiday on their contractors over the Christmas period, and explains the second major round of ‘take it or leave’ rate cuts.

“So it’s no surprise that new [contractor] vacancies have declined quite sharply”, the analyst firm said. “[However] in some niche areas, such as compliance and risk, there is still significant demand.”

Even more positively, and for all temporary candidates, the commentators agreed that non-permanent staff would be the favourable recruitment option as soon as hirers perceive conditions to have improved.

“The flipside is that when confidence revives, contractors are usually the first to be hired. Employers needing additional capacity usually look to boost contractor numbers rather than risk the cost of taking on permanent staff while the economy is still fragile,” APSCo said.

“This is the first sign of a fall in demand for highly skilled contractors after a robust recovery this year. Hopefully, what we are seeing now is a momentary wobble as employers adopt more conservative recruitment policies in light of the Eurozone crisis.”