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The latest recruitment industry report from REC shows a leap in the rate of demand for IT contractors over October, with agencies crossing their fingers for a continuation. The positive news in the Recruitment and Employment Confederation's Report on Jobs also showed demand for contractors at 63 per cent and ranking third out of eight sectors where it measured only 43 per cent and ranked sixth one year ago. The managing director of Launceston-based Summit Computer Recruitment - which specialises in placing project management/program management contractors - welcomed the news. "We have started to see an increase in activities and the numbers of contractors out working. I'd agree things are starting to pick up, he said. "There has been a real pick-up since August after a very quiet June and July, following a bleak period stretching back to January." He said the service sector and software houses are a good market, with e-government work from the public sector also being a current area of work. REC's report said, as has been the case since May 2001, agencies’ margins on contractors, continued to decline in October, as strong competition enabled a number of clients to negotiate more favourable rates. However, despite a slight acceleration, the rate of decline of margins remained modest across all sectors. "Margins have been bamboozled and will come down further, they're in no hurry to go back up either," said Summit Computer Recruitment's MD. "Beggars can't be choosers and that is strongly relevant to the contracting market at the moment. "The rates for the contractors themselves have been relatively stable over the last year. We haven't seen a return to the rates cuts of about 18 months ago," he added. Clive Williams, of Surrey-based agency, Highams Systems Services Group, says the contractor markets remain "fairly flat" in finance and investment banking and insurance sectors, with slight flurries recorded over the summer period. His agency supplies contract business analysts and contractors who implement software packages in the finance market. "We were seeing that some of the IT projects that were previously shelved are now being dusted off and reviewed but not implemented, so that's created a bit of demand," he said. "Some of the regulations going through in the finance market at the moment spell good news for contractors as some of the projects we are dealing with under these new rules are scaling up. He said his rates and margins are still dropping, as they have been for the past two years. "Some of that [decrease] is coming from more aggressive pricing from agencies trying to hold their ground, but mainly from the way clients are now buying in, where they set up supply agreements with more generalist agencies using bidding wars, or rock-bottom rates. It is a reverse auction for our rates and margins. Foreign outsourcing is also affecting market dynamics too, he admitted. "We noticed the IT market analyst Richard Holway (Ovum Holway) has predicting a pick-up in 2005/6, so we have at least another year of fairly flat growth before any signs of improvement," he added. Key skills reported in short supply for IT contractors were only for IT developers. Average weekly billings received by recruitment agencies from contract workers increased for the fifth month running in October with the rate of expansion picking up sharply since June’s modest rate to the sharpest since February 2001, REC said. "Despite the positive news, next month will probably be more of the same, with Christmas perhaps being the next positive jolt until we reach the New Year. When we get there we will see if we can crack on and keep the momentum going," Summit Computer Recruitment's MD said. Demand for permanent IT staff was put at 57 per cent in fourth place out of eight sectors, last year it was at 39 per cent and ranked bottom. Key permanent staff skills reported in short supply were only for programmers. Brett Walsh, Head of UK Human Capital at Deloitte said the latest Report on Jobs survey "paints a favourable picture of the UK recruitment market in October. "Indeed, the number of staff appointments by recruitment consultancies is currently running at levels not seen for three years, whilst private sector employment rose for the third successive month. However, employers are now starting to feel the cost implications of emerging skill shortages, which resulted in a marked increase in wages and salaries." Shobhan Gajjar Website Director for Totaljobs.com and CWJobs.co.uk says: "We are seeing increases in contract positions right across the board at totaljobs.com and CWJobs.co.uk. However, it's our banking and finance customers, particularly in the city, that are showing the strongest demand for IT contractors as confidence of a recovery grows amid new deals and flotations in the financial markets. There is definitely a more positive feeling in the industry, but as ever, nobody is quite ready to say that the market has fully recovered." Meanwhile, Jobstats reported average IT contractor rates at £19 per hour and rates for permanent IT staff at £37,000 per annum. The top three skills were: Management, Support and Analyst. The top three locations were London, City and UK. The top three agencies were Lorien, ARC Recruitment Spring IT (Permanent division). Presswire Nov 20, 2003 Email this article Printer friendly page Previous Page
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