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The midwinter remains bleak in more ways than one. As snow fell unexpectedly early, and economists warned of the toughest times since 2001 (or 1991, or World War Two, or the Great Depression, or the beginning of time), contractor IT rates went into an early hibernation. Following the slight increase of average rates across the ten most commonly requested contract IT roles last quarter (to £31.45), rates have fallen back fractionally, to £31.43. Given the relentless tales of woe from the business pages, this can be considered a small mercy. There have been fears that rates were teetering on the precipice, but they may have bottomed out. The broader economic news suggests, however, that there are harder times ahead. Certainly, those likely to be affected by the “tens of thousands” of jobs to go at HP will believe so. Mike Stevens, KPMG Partner and Head of Business Services said recently when commenting on the monthly UK job stats from the Office for National Statistics, “Leave no doubt that the UK jobs market is now heading downhill at breakneck speed. The drop in permanent and temporary placements is far steeper and deeper than it has ever been in the [KPMG/REC] survey's 11 year history.” What’s certain is that confidence has been hit, and this may be stopping people moving. According to research from giant group, the number of contractors rating job security as their top priority has risen by a quarter in the last three months. Some 20% now rate this as their top priority when considering contracts, compared to 16% three months ago. As Matthew Brown, giant’s MD, notes, “When times are good and the job market is buoyant, contractors tend to be more concerned about higher hourly pay, job status and working for a prestigious employer.” In the current climate, however, he sees people, “concentrating more on securing long term contracts”. This may partly explain the stagnation of rates, as contractors have nudged for six and 12 month deals, rather than three month stints at a higher rate. In essence, there is fear everywhere, and much of it is well founded. The research by giant also found that long-term unemployment had risen during the past 3 months, to 5.3% of contractors, from 4.7% in the second quarter. But Brown does offer some positives. “At the bottom of the market after the dot com/Y2K bubble burst,” he says, “contractor joblessness exceeded 12%, so the market is still in reasonably good shape.” But that’s little consolation to those who have found their income rapidly fall. ATSCo and the online CV company iProfile.org have found that contractor rates for staff in the financial services sector have fallen to their lowest levels in five years: down to £44 per hour, a 12% drop on six months ago, when a temp could expect £50. It is the biggest drop in rates that their survey has registered since 2002. Ann Swain, ATSCo’s CEO, reckons that because there is no a great deal of oversupply, employers are trimming rates, rather than cutting people out completely. "The key difference between this and the 2001/02 downturn is that IT departments had a skills surplus following the dot-com and Y2K booms, but there is much less fat to trim this time around. Some belt tightening is to be expected but mass layoffs seem unlikely at this stage," she said. Other figures paint a bleaker picture, however, with both rates and number of jobs heading south. Itjobswatch stats show average hourly rates for IT contractors in the finance industry have fallen by more than 10% in the last 12 months, from £26.95 to £24.09. The difference in these averages can be attributed to the far higher number of lower level roles counted by itjobswatch. More concerning, is that there are one third fewer roles advertised than a year ago (9,500 compared to 16,121). But, there are some positives for IT contractors in a downturn. Just as Enron lead to the Sarbanes-Oxley Act and a flurry of work for contractors able to cope with the tough data management that brought, so the credit crunch is expected to bring much tougher regulation, which will require the help of IT contractors to implement. As Charles Ward, chief operating officer of IT trade association Intellect, says, “Greater regulation in the financial sector will create opportunity for companies specialising in that area, and there is going to be massive system changes required.” But, such changes are unlikely to be seen for a while, and there will be a lag between regulation being passed and large scale IT projects being developed to cope with it. Finally, some perspective. The year has seen peaks and troughs for contractors, but the steadying of rates in the final quarter could be good news. As Jeff Brooks, Chair of the IT & Comms group with the REC notes, “In most, if not all organisations, IT provides the sinews to make an organisation operational, stable and productive. Much like the continual need for workers in the healthcare sector, despite the economic outlook, demand for IT contractors is still high.” The rates might not be as grand as they once were, and there may be less options for picking and choosing the next job, but things have completely imploded just yet. Matt Chester Data sources: Dec 17, 2008 Email this article Printer friendly page Previous Page
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