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The IT jobs sector is fast becoming a “buyers’ market” as clients leverage their monetary pressures and the growing availability of candidates to call the shots. Bleak business conditions have forced end-users in all industries to scale back their freelance IT staff, making their hirers more selective when recruiting them afresh. As demand for IT skills no longer exceeds their supply, noticeably in the last three months, pay growth for IT jobs will continue to ease for 2008, and perhaps in 2009. Hinting the decline could not be seasonal, Hugo Sellert, head of economic research at Monster.com, yesterday said IT hires have fallen every month to their lowest rate in 16 months. Pointing to the site’s August jobs index, which tracks thousands of UK IT roles on Monster and its rivals, he explained that the decline had ‘started to tip the scales’ towards employers. The “driving force” behind this power shift was the softening of demand for temporary IT workers – staff who are easier to dismiss and therefore were “first to go” as belts tightened. “I definitely think there has been a market change over the last three months towards the employers having the upper hand,” Mr Sellert said in an interview with Contractor UK. “IT recruitment is now following the overall downward trend of recruitment nationally. Availability [of IT jobs] has sunk to its lowest level since April 2007.” Jeff Brooks, chairman of the IT & Communications sector at the Recruitment and Employment Confederation, said it was clear that the contract IT jobs market was tightening. “Demand has fallen,” he added, reflecting on the REC’s Report on Jobs last month. “Some of this is seasonal as August is a key holiday month”. “Nevertheless we…are moving into a buyers' market where employers can be more choosy and as a result, time to hire will increase as firms prolong the hiring decision.” Respondents to the REC’s report, including IT recruiters, said client companies were scaling back their temporary staff requirements due to an “uncertain business climate.” Pay growth for temp staff, including IT contractors, plummeted to a 61-month low last month, attributed to clients’ “cost considerations” and “strongly rising levels of temp staff availability.” These cost considerations will imminently disturb public sector IT contractors, despite their assignments traditionally being seen as less vulnerable to macro economic pressures. Ovum analyst Alex Simkin said: “Over the next twelve months, tightening budgets across the public sector will see…IT staffing agencies face an increasingly tough market.” “The public sector will be less likely to use contracted, temporary staff, squeezing the margins of staffing suppliers.” He was responding to a trading update from Parity, the public sector IT group, which he said was “better placed than most” other public IT recruiters to resist the incoming “price pressure”. The group’s first half-year results reflect the conditions in the jobs market: its IT projects and consulting division tumbled 28% in profits on last year, given the patchy demand this year. As IT training is also among the first costs to be axed when clients scrutinise their bottom lines, Parity Training suffered a before tax loss of £359,000, compared with £350,000 profits a year ago. But the firm’s decision to exit the high-volume, low-margin IT jobs market in favour of higher margin jobs, like SAP, paid off, as pre-tax profits for its recruitment arm rose 19% to £1.4m. Elsewhere in the market, evidence exists that other IT niches are holding steady, both in rate and demand; such as a shortage of CNC programmers, reported by REC agents. Chief executive Kevin Green said: “The demand for both permanent and temporary workers is weakening, although it must be remembered that this follows a period of unprecedented high demand for staff. “A positive benefit for the economy is the muted pay growth that the increase in the supply of candidates is creating. Even in these uncertain times, recruitment consultancies are still seeing continued demand for flexible staffing to meet businesses fluctuating people requirements.” Speaking yesterday Mr Sellert, of Monster, agreed, by saying demand for IT staff now appears to be pulling back dramatically due to its runaway level before the credit crunch. “As the UK economy continues to slow, we are going to see recruitment continue to slow as well,” he added, when asked about the outlook for IT workers. “But in the long run, IT is one of the sectors, and occupations, that is better placed to weather the storm… [because] IT is definitely an asset most companies will continue to invest in. “It could be an advantage that IT hiring is slowing down at what could be an early stage in this downturn, because it might then be one of the first areas to pick up.” Sep 11, 2008 Email this article Printer friendly page Previous Page
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