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Public sector jumps to being second biggest employer of IT contractors

A record fifth of all IT contractors are now working in the public sector, meaning that for the first time more contractors are working for the government than in financial services, according to contractor specialist, Giant group plc.

The specialist’s ‘Contractor Confidence Index’ (CCI), measured the first quarter for 2004 and found 20.5% of contractors now work in the public sector compared to 19.9% in finance.

Six months ago, just 12.4% of IT contractors surveyed worked in the public arena.

Contractors were polled on a range of issues including their current and future job prospects, earnings growth - unemployment and what they look for in a contract.

The results charted responses from the third quarter of 2003 against the first quarter of this year, showing sustained growth in optimism among IT contractors.

Figures published by the Office of National Statistics (ONS) support the findings with public sector jobs jumping by 162,000 last year with the sector now accounting for about 20% of all jobs.

"Historically, the public sector has had a very low ratio of contract to permanent IT staff," comments Matthew Brown, managing director of Giant.

"That mix is changing rapidly. The public sector has launched an unprecedented drive to recruit contractors to meet its 2005 deadline for online services, altering the dynamics of the IT jobs market.

"By increasing its use of contractors the public sector should be able to allocate skills on major IT projects far more flexibly, saving time and money. The net result should be better value for the taxpayer."

"With contractor unemployment falling and demand picking up across the board the government is going to have to be increasingly competitive on pay and benefits if its to attract and retain the right quality of people."

Job opportunities

Contractors were asked in which sectors they expected to see more job opportunities in the next 12 months. 26% said financial services, compared to 24% in the last survey six months ago.

Matthew Brown said of the CCI survey: "It’s encouraging to see the highest level of growth forecast for the highest paying sector. More job opportunities in finance should give a significant boost to the value of the contract market."

The poll also shows that the proportion of IT contractors working in telecoms has fallen from 20% to 18% in six months. Only 17% of contractors think there will be more job opportunities in telecoms next year, down from 19% six months ago.

"The telecoms market should start to recover as the take-up of 3G services reaches a certain critical mass. So far, roll out of these services has been slow but consumer indifference can only last so long," says Brown.

Earnings

66% of contractors expect their earnings to increase this year compared with just 45% in 2003. Only 8% of contractors expect to earn less this year - in contrast to 28% that forecast their earnings would fall in 2003.

Contractor unemployment tumbles

Contractors polled logged the average number of days between contracts. According to the survey, the number of contractors not working for 90 days or more between contracts has almost halved from 15% six months ago to just 8% at present.

Giant said: "Head counts were really savaged during the downturn, at one point leaving over a quarter of contractors out of work. Now demand has picked up after the cull companies are finding they are rapidly having to hire a lot of people."

Maximising income drops in importance

The final question in the probe asked contractors to rank in order of preference what attracted them most to a contract – income, job security, work-life balance, skills development, job responsibility or employer/brand status.

Results

*Scores were calculated according to the preference given by contractors for each category. The maximum possible score is 600.

Mr Brown said: "Contractors are less concerned about income because gaps between contracts are narrowing. There is now less of a need to maximise income in the expectation of long periods without work. Perhaps this is why we are seeing career issues like work-life balance and skills development become more important considerations for contractors when choosing a contract.

"A reputable employer or brand looks not only looks good on the CV but may well lead to better work opportunities for the contractor in the longer term."