IT contractor demand index score sinks to 26-month low

A national index of IT contractor demand posted its lowest score in January 2019 since the fourth quarter of 2016.

Hirers being in ‘wait and see’ mode over the type of Brexit Britain will get is largely behind the 26-month low, said KPMG, which produces the index with staffing group the REC.

In the pair’s Report on Jobs, KPMG’s James Stewart said there was “little reason to believe the brakes will come off” from hirers until Brexit completes  -- scheduled to on March 31st.

'Sharp decline'

For now though, starting rates are “historically strong” due to both a “sharp decline” in candidate availability and, in the IT sector, at least a doubling in the stock of sought-after contractor skills.   

In fact, in December 2018, when demand for IT contractors stood in the report at 58.3, nine IT contractor skills were deemed scarce. Now, in January, with demand of 56.3, there are 21.

Almost 10 are uniquely scarce among contractors (i.e. they are not scarce for full-time jobs), such as Business Analysis, Full Stack Development, Ruby, Python and IT Programming.

'Opening up'

The rest, which are in short-supply among permies too, includes DevOps, Development, Data Analysis, Infrastructure Analysis and Software Development.

The December trend of skills gaps "opening up" -- meaning they consolidate, may have abated however, as Oracle Fusion is not scarce among contractors anymore (only permies).

Neil Carberry, chief executive of the Recruitment & Employment Confederation (REC), reflected on both labour markets, albeit generally and not just in IT.


“This is the first month since July 2016 where permanent placement numbers have dropped, with weaker – but still positive – performance for temporary roles”, he said.

In IT, contractor demand registered last month at 56.3, indicating demand still grew (any score over 50.0 implies monthly growth), but representing the lowest score since November 2016.

“With Brexit just days away now, it’s definitely a nervous time for recruiters,” says KPMG’s Mr Stewart.

'Sharp reminder'

“The majority of sectors across the UK economy are now more cautious, and hiring more slowly than they were 12 months ago.”

The REC said : “[The January] results are a sharp reminder to politicians in Westminster and in Brussels of the need to provide businesses with clarity about the path ahead, so they can invest with confidence.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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