IT contractors, is a ‘shelve the big-ticket talent’ trend biting you?

Contractors in IT who took a deep dive into our newest survey of over 3,600 technology leaders would ordinarily return to the surface rubbing their hands together at some of the findings, because of what it should mean for their prospects as a freelance technologist, writes Colin Morley, director of Harvey Nash Recruitment Solutions.  

After all, a bigger chunk of the leaders (55%) reported IT budget increases than at any time over the last 15 years (other than 2010), and a hefty two-thirds of the organisations admitted that they now let their technology be managed outside the IT department.

All that glitters...

But despite what sounds like a lucrative shoo-in for third-party, external technology consultancies, suppliers and outsourcers, the coalface of IT contractor recruitment right now tells a different story, and it’s not quite ‘business as usual’ for such external IT providers.

Firstly, we should caution that this trend is only ‘emerging’ and not established. Secondly, contractors in IT are still very much the ‘go-to’ resourcing solution, both for organisations reacting to an urgent resourcing requirement, and for those that have made a strategic decision to create flexibility in their operating models (A Full-Time Employees/FTE and Contractor/Contingent ratio of 70:30 is typical). However, the trend we are seeing in contract IT recruitment is that more and more contractors are coming to the natural end of their contracts and the number of extensions is in decline.

The return of pick up, put down

The simplest explanation for this is that UK businesses are being more stringent in how they utilise contingent resource -- only bringing them on for a specific piece of work and then letting them go once it is complete.

At the same time, we have seen an increase in permanent IT placements this quarter, which historically we wouldn’t normally expect because we are in such an uncertain economic and political situation. So while there is still of course demand for IT contractors, our experience right now is that demand for FTEs –‘permies’ in contractor parlance -- is higher.

Take your pick at uncertainty's cause  

Based on our conversations with end-clients and hiring managers, the reason for this, we believe, is that businesses in the UK are currently prepared to commit to increasing permanent headcount for Business As Usual (BAU) roles, but they are putting off the ‘big-ticket’ Change, Transformation and Tech projects – which would require contractors -- because of the current uncertainty.  And behind that uncertainty, it’s a case of ‘take your pick.’ So there’s Brexit, the election of the UK’s next prime minister; private sector IR35 reform, America, China…the weather! But BAU roles must continue no matter what.

What is also continuing much to the chagrin of the 3,000-plus IT leaders we grilled for the Harvey Nash/KPMG CIO survey, is skill shortages -- at our count, these are at their highest level since 2008. And these shortages are much to the benefit of the right kind of contractors. Indeed, in certain areas where the shortage is most pronounced, such as Cyber Security, AI, Big Data, Business Analysis and Architecture, end-users remain predominately dependent on the contractor market.

Security still among contractors' safest bets

Specifically with IT security, we have witnessed an 18% leap in organisations outsourcing more and more of their technical Security Operations/Incident Management. These Managed Security Service Providers are snapping up much of the available permanent talent. Meanwhile, CISOs who own strategy tend to want to utilise their contractor budgets on more security transformation roles, so you’re more than safe from today’s ‘shelve the big-ticket talent’ trend, if you’re a Security Architect or a Supply Chain Risk specialist. For other IT contractors though, it’s a trend that some of them will have cause to hope stays as nothing more than merely 'emerging.'

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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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