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Changing economic conditions born out of the global credit crunch are forcing freelance consultants to rethink how they assess temporary IT contracts. Since the last downturn, medium-term contracts promising high returns topped their wish-lists, in contrast to lower-value, short-term roles, almost regardless of the client. But with today’s fresh economic pressures, these stable, lucrative roles are “becoming few and far between”, made scarcer by swathes of ex-IT employees returning to the fold as contractors. The result is a “new breed” of IT contractor who, while still rating money as the dominant factor, is recognising the power of brand and reputation in their contract decisions. “These modern contractors use…employer reputations to leverage their next contract,” added Matthew Rodger, director of Alexander Mann Solutions, which polled 160 IT contractors. “With a lot of companies feeling the pinch and not wanting to take risks when hiring staff…the use of familiar brands provides assurances of a contractors’ capabilities and experience.” Contractors working in the UK, Hong Kong, Singapore, Australia and the US were surveyed to gauge how the temporary worker market is coping with the current economic crisis. Only 11% of the contractors saw their contracts being extended over the next 12 months, just 12% expected a pay rise, and half said the number of IT contracts will reduce in 2009. Ominously for contractors in sectors less exposed to the global financial pressures, the respondents served blue-chip firms, not financers and banks, whose troubles are already well-known. Yet at a glance, the market for financial IT staff might appear buoyant: the number of IT contractors vetted by Powerchex has increased 10% compared with the start of the summer. “The majority of the applicants who are now taking on contract assignments had permanent positions prior to the assignment,” the firm said, “perhaps they cannot find a permanent role.” Contrary to the survey’s findings, Powerchex’s director Alexandra Kelly added that the duration of most IT contracts is increasing, though she confirmed fears that rates are falling. “Contractors have enjoyed a favourable few years where they have been able to command a premium for their services,” said Mr Rodger, reflecting on the findings. “Times are now changing. Today, companies are managing their contingent workforce more tightly, for shorter spells, often on a reduced cost of ownership.” Contractors are onto this belt-tightening, as they are “changing the way they operate” by opting for high-quality brands, albeit lower-value ones, which will resonate with future clients. According to the poll, half of all the contractors questioned said that the reputation of a client’s brand was now ‘very important’ or ‘important’ when considering one of their IT contracts. Just 20% look at the size of the client’s business first, in contrast to 76% who attach the most importance to pay, followed closely by the potential client’s industry sector. “Contractor employment is often an early indicator of wider employment trends,” said Billy Hamilton-Stent of research agency Loudhouse, which carried out the poll. “Respondents are evidently experiencing a tightening of available work in the market, leading to a greater number of professionals pursuing fewer contracts. The expectation is also that pay rates and rises will cool.” Powerchex said the downward pressure on pay was being felt already: “Our clients are saying that they are reluctant to reduce rates on existing contracts but new contracts are being negotiated at lower rates.” Oct 8, 2008 Email this article Printer friendly page Previous Page
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