COVID-19 lockdown depresses IT contractor jobs market to record-low

The largest ever crash in UK demand for IT contractors hit in the four weeks of April 2020, when the coronavirus pandemic and measures to contain it brought the country to a standstill.

Showing the most severe contraction in its 22-year history, Report on Jobs scores demand last month for IT/Computing skills on a contract basis at an unprecedented, all-time low.

The score, 11.9, is almost three times lower than what was recorded for IT contractors just a few weeks back -- in March (the index’s growth score is 50.0), when the outbreak started and hiring freezes began.

The record-low is also some way off the previous IT contracting nadir of 28.1, recorded in January 2009, when seasonal drop-off combined with the financial crisis which went on to cause the Great Recession.

'Temporary company closures'

But the COVID-19 outbreak “and the subsequent public health measures” to try to restrict it have caused “temporary company closures” and, in turn, redundancies, the report says.

Published before Boris Johnson’s announcement last night to ease the lockdown but keep social distancing measures in place, the report blames “uncertainty over the outlook”.

 “[This uncertainty] is weighing heavily on the nation… it’s an unprecedented situation for UK business,” says James Stewart, vice-chair of KPMG which co-authors the Report on Jobs (RoJ).

He added: “The COVID-19 pandemic continues to wreak havoc on the UK jobs market with a record drop in vacancies and recruitment plans frozen.”

'Securing talent during lockdown'

Yet last month, a veteran IT recruiter said end-users who offer ‘key’ public services were still hiring contractors. And online, agents are warning firms to be ready for the morning that lockdown lifts.

“[Some of our] clients [are] talking about working on vacancies now and securing talent during lockdown,” one agent said in a LinkedIn post.

“[So] some interesting chats about the fact that recruitment takes time and many brands will need to hit the ground running when we get back to it, so having that person interviewed and ready to go is essential.”

But another recruiter hinted that it is the sheer scale of hirers’ negative reactions to COVID-19 that is putting the positive reactions of ‘the planners’ and ‘the preparers’ in the shade.

'Instant 20% contractor loss'

“Those two types of clients do exist,” the recruiter told ContractorUK.

“But much more normal is for us to lose an instant 20% of contractors across the board, whenever a major crisis like this one hits.”

Despite the contractor terminations, the Recruitment and Employment Confederation said its member agencies in April were still seeking six types of IT contractors.

Each declared ‘in short supply’ for relevant contracts, the six are Data Science; Database Development, Development, IT, Java and Technology.

'Economic strain cannot be sustained'

REC agencies placing full-time staff said they too looked in vain in April for Data Scientists, Database Developers, Developers, IT, Java and Technology professionals, but also had insufficient numbers of applicants for CNC and Data roles.

“Fighting the virus must remain our priority,” the confederation said in RoJ.

“[But] the strain the lockdown is placing the economy under cannot be sustained indefinitely without very significant and long-lasting effects on unemployment and job creation.”

In line with chancellor Rishi Sunak’s comments about winding down the CJRS, the REC’s Neil Carberry said: “[The] government needs to work with businesses to ensure that the support they have offered tapers out as the economy returns to normal, rather than leaving firms facing a cliff-edge and having to cut costs quickly through things like higher redundancies.”

'Clients went into coronavirus shock'

However, a staffing boss who places IT contractors in London said the market would probably ‘do its thing,’ almost no matter what.

“We did get the industry-standard 15% terminations as clients went into shock due to coronavirus – but that’s how the market works.”

Responding to questions, the boss also told ContractorUK: “It’s a flexible workforce and in times of crisis there are always some early causalities, unfortunately. Let’s just hope that the rest of our fantastic freelance workforce can continue to provide value -- to clients remotely -- while we ride out the rest of this awful storm.”