City recruiter sees IT contractor pay jump 12%

The upside of a recruiter suffering its highest exodus of contractors for three years due to IR35 changes is that those PSCs who stayed can tap into rates of at least 10% higher.

In a newly published report reflecting on 2017, City-focussed Morgan McKinley said that average IT contractor pay increased last year by 12%.

It was in the same 12-month period however, that the agency saw a three-year high in its contract-to-perm conversions, albeit solely among PSCs working at taxpayer-funded bodies.


“The changes to the intermediaries legislation…were a game-changer for contractors within the public sector,” says Morgan McKinley operations director Victoria Walmsley.

“There has also been an increase in the number of fixed-term contracts available, particularly within small and mid-tier organisations and perhaps some of the uncertainty…seems to have given contractors more interest in longer term contracts which tend to offer more security.”

And uncertainty still prevails for contractors due to two distinct forces from one pressure.

Firstly, “as overall IT spend and salaries start to increase, companies will look for ways to reduce cost, with the primary casualty often being contractors,” Walmsely warned.

Secondly, throughout 2017, both end-user and consultancy clients of the agency “consistently” switched focus “from hiring contractors on day rates to permanent employees and permanent roles.”

Silver linings

But in the agency’s report, there are two silver linings for temporary IT workers.

The first is that due to technology evolving at an increasingly break-neck pace, “it can be difficult” for 9-to-5 job-seekers to “decide which IT areas to specialise or develop skills within.”

The other obvious boon for niche IT contractors, notably those in London, is that the “supply of experienced [IT] talent has been restricted”, thanks to Brexit placing the UK “further down the relocation preference list for international applicants.”

A potentially third factor that seems to give contractors the edge over their full-time counterparts stems from the vacuum left from there being no singular accreditation or body associated with the range of new technologies being used in the IT industry.

“Whilst some independent organisations and training firms have been established, often the case is that companies have a greater interest in those [candidates] who have hands-on, commercial experience with the latest technologies,” Morgan McKinley said.

“Therefore professionals with a breadth of experience in and outside of their current role will put themselves ahead of the competition in the hiring process.

“In particular, job-seekers that attend specialist meetups and are active on community sites such as Stackoverflow and Github tend to be well received by recruiters and hiring managers.”


Soft skills and the ability to demystify technology to a non-technical audience are pitched in a ‘home counties’ section of the report as the next bolt-on IT contractors in the regions should get.

“Organisations are increasingly looking for individuals who are commercially focused and can effectively communicate with non-technical personnel.

“Cyber and information security can be bewildering to non-technical colleagues and so the ability to make the complicated seem simple is priceless.”

Cyber security is also where the temporary labour market seems most fluid so end-users need to be vigilant.

'Under market rate'

“Almost 50% of cyber & information security professionals changed roles in 2017 due to salary increases and numerous opportunities being available,” the agency said in the same section of the report.

“Quite often [pay is] significantly under market rate or the expectation has been for one individual to fulfil multiple roles,” it added, addressing end-users. “Consider what else you can offer in terms of flexibility, access to labs in order to fulfil their own R&D or exposure to new technologies.”

Elsewhere in its review of 2017, the recruiter identified the ‘hottest’ IT skills for contractors; how they’ve come about and what forces are for or against them staying sought-after in 2018. To see what it says is 'hot' in Development and DevOps, click here.

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