Coronavirus puts IT contractor jobs market into partial paralysis

Coronavirus has exacerbated four months of already negative demand for IT contractors, to inflict the worst conditions for freelance technology hires in more than a decade.

So despite November 2019 being the onset of contract IT skills slipping into ‘the red’ (48.7), COVID-19 accelerated it from 49.1 in February, to just 41.9 in March -- a score unseen since 2009.

The subtext is that while IT contractor demand was already dwindling due to IR35 reform fears (only a 50.0+ score indicates monthly growth), the pandemic has pushed it deeper into negative territory, and at a rapid pace.

'IT contractor demand has dropped significantly'

Asked what this dramatic shift in its Report on Jobs looks like for IT contractors ‘on the ground,’ the Recruitment & Employment Confederation hinted that new ones simply weren’t.  

“Many firms have put a freeze on hiring,” a REC spokesman said yesterday to ContractorUK.

“And many have been cutting spend. Because temporary IT roles aren’t considered ‘critical,’ that has meant that demand for IT contractors has dropped significantly.”

Although the spokesman did not blame the ‘coronavirus’ specifically, a few corporate users of IT contractors are putting in place measures to mitigate its impact on their operations.  

And ‘non-critical’ workers aren’t faring well. For example, as part of a £100million package to mitigate the virus’s impact on profits, Capita is reducing its use of freelance contractors.

'Capita reallocating away from contractors'

The company declined to comment. But in an update spotted by Techmarketview, Capita said it would make the contractor cutback “by reallocating and prioritising internal resources.”

A much smaller consultancy, supplying both contractors and IT services to the banking sector, told ContractorUK that it is experiencing much the same.

“Business is very tough at the moment. We’ve had several clients just cancel or defer work because of the COVID-19 situation.

“So yes, many projects are being stopped,” the consultancy said. “However the executives [at one major bank we supply] have said they don’t want to be seen to be laying off contractors”.

'On pause'

Projects being stopped helps explain why the labour market – for IT contractors and other job candidates --is “on pause,” according to REC’s chief executive Neil Carberry.

“Job postings started to drop quickly in mid-March,” echoes Indeed economist Jack Kennedy, indirectly referring to the period covered by the confederation’s report.

He explained: “The economy is coming under considerable strain from the coronavirus pandemic and containment efforts, including social distancing.

“But the occupational and regional impacts vary by extent of direct exposure to shutdowns.”

'Massive disruption'

While the REC found a gloomier picture (temp billings “fell across all monitored English regions,” led by London then the Midlands), social distancing is concerning Mr Carberry too.

“It does mean massive disruption in the short term, but we need to remember that this has to be done in order to protect businesses and save lives,” he said.

But some wonder if the ‘two metre apart’ rule should dictate placements cease completely.

“A couple of potential candidates questioned why [we] would be recruiting at a time like this,” says Kate McCarthy-Booth, founder of McCarthy Recruitment.

“[But] we are doing it safely; everyone is working from home [and] we have the technology for our clients to recruit and onboard remotely.”

'Getting ready to re-open'

Posting online, she added: “[Moreover], we have clients with an immediate need, delivering essential services…[or] planning for the future and getting ready to re-open their doors again wanting to be one step ahead with offers made.”

James Stewart, vice-chair of KPMG agrees: “UK business needs to do what it can to adapt and survive this pandemic -- and be able to emerge in the best position possible to ramp up once the crisis comes to an end.”

But first firms need some help. At the REC, Mr Carberry said: “Our reading is that holiday pay doesn't accrue while on furlough for temporary workers -- though it does for employees. We would like government to be clearer on this [for temps].”

'Give clients and agencies confidence'

Addressing member agencies on LinkedIn, he also said: “[The government] supporting 14 days of Statutory Sick Pay for all workers would [also] give the workforce peace of mind [and] give clients and agencies confidence to place temps”.

Skills last month in short supply according to the confederation’s temporary technology job agencies were many IT jobs, including Development, IT, Java, PHP Development, Ruby, Software and Technology.

Software, Technology and IT are similarly scarce for full-time positions, the agencies found, alongside Analysis, Data, Data Science, Design Management and Development. 

Editor's Note: Find IT Contracts on ContractorUK here 

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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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