Demand for IT contractors rocketed in March to 32-month high

Demand for IT contractors rocketed in March on the back of businesses remerging from covid lockdown requiring technology to underpin their scheduled bounce back.

Reform of IR35 in April may have also provided a chance for end-users to make a last intake of contractors under the ‘old’ off-payroll rules, under which liability does not sit with them.

But almost regardless of what caused IT contractor demand to surge from a barely growing 52.0 in February to a massive 62.9 – the highest score since July 2018, the effects are clear.


“The rebound off the back of the government’s plan to ease national lockdown measures… is good news…but employers are still identifying a big skills gap across sectors including IT.”

Explaining both her assessment, and the figures in Report on Jobs, Claire Warnes, a partner at the report’s co-authors KPMG said supply was “not matching up” with the sudden demand.

Neil Carberry of the REC, which publishes the report said: “As companies start to recruit, they will need to appreciate that the labour market is still suffering from all sorts of shortages.”

'Short supply'

In the IT sector, shortages are acute for BI, Cyber, Data, Development, Digital, IT/Technology and Software, as these were "in short supply" on both a permanent and contract basis.

In the contractor market exclusively, REC member agencies also encountered shortages of candidates for Java and Software Engineering contracts.

But these two were not scarce in March in the full-time market where agencies struggled to fill Agile PM, Azure, C#, CAD, Data Science, Software and Infrastructure Analyst vacancies.

'Increase for software developers'

One of the shortages shared by both markets -- software -- flagged up last month on too. 

“The prime minister’s roadmap….specified conditional dates for a staged reopening of the economy” the website began.

“That gave employers visibility and new job postings…[in areas like] software development…. have increased.”

'Consumer-facing sectors'

As to why some parts of the labour market have seen a “pick up” more than others, Indeed’s Jack Kennedy spoke of the “release of restrictions,” and forever altered ways of working.

“Already, we can see tentative [recovery] signs… and these are most welcome,” the site’s economist began in a post.

”But we’re only at the start of a long road back and the destination remains uncertain. The labour market is likely to be permanently altered in some ways. In particular, the office is not dead, but we may visit it less than we used to. That will have ripple effects on consumer-facing service sectors.”

'Quicker than expected bounce back'

“Hiring has bounced back in a big way,” said a less cautious-sounding Mr Carberry, the REC’s chief executive, also referring to March.

“[It’s] more evidence that the economy is bouncing back quicker than expected. [And is] likely, therefore, that the lower-than-expected peak in unemployment is realistic.

“[But] for companies, the lesson is that the tight labour market won’t be away for long -- in some sectors it hasn’t gone away at all. That makes how you employ matter. What is your offer?”

'Highly reactive, chaotic environment'

Online, one contractor said his prospective client’s offer was cheeky, if not derisory.

“Feedback was ‘they like you….but want you to drop the rate by 20%.’ I know my baseline rate and what drives it up or down, so I thought this was cheeky, especially as the environment would be highly reactive and chaotic."

A specialist in change management, the contractor added: “I told the agent I'd drop by 5% - a gesture, but I could see no reason to drop more. It turns out they went for someone less experienced. Fine, their prerogative.”

'Candidate cried, just to be offered work'

Elsewhere in March, others suggested that any offer is a good offer, even if prospects for job-seekers were suddenly on the up and up.

“Just offered one of my candidates a permanent role and she burst into tears,” an agent wrote on LinkedIn.

“She's had some bad experiences due to discrimination for a mild disability (shame on them).

"Her temp role with St John Ambulance helping recruit for the vaccination campaign comes to an end on Thursday And she's been offered a permanent role on a great salary with a fantastic company starting on Tuesday. Grinning like a Cheshire Cat!”

'Not a tick-box exercise'

As to the thorny part of the agent’s update (that the candidate was discriminated against), the Recruitment & Employment Confederation (REC) indicated last week that companies could not afford to engage in any prejudicial behaviour.

“[In a skills-short market] reviewing hiring practices and doing things in the best way possible will matter more than ever,” predicts the confederation’s Mr Carberry. “Inclusive hiring is not a tick-box exercise -- it’s about finding the best candidate for the job no matter who they are, to help your business succeed.”

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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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