IT contractor demand surged to 23-year high in May 2021

Demand for IT contractors exploded almost off the charts in May 2021, achieving a stupendous level not recorded since May 1998.

The 23-year high for IT contractors is a direct result of pent-up demand for temporary technology talent releasing thanks to coronavirus restrictions nearly totalling lifting.

Although the final lifting on June 21st may now be delayed as the Delta variant spreads, the demand has grown for three months in a row, ever since restrictions started to ease.  

'Huge bounce'

“We now have a consistent picture over the past few months to show that confidence is growing and hiring plans are in motion,” said the REC, which authors Report on Jobs.

Taking to LinkedIn to underline the jump in activity which his staffing agencies have seen, REC chief executive Neil Carberry said there was a “huge bounce in hiring during Q2.”

He was referring to the contract market as a whole – up to its highest level of demand for five years, growing at its quickest pace for six years, and with the best starting rates for nearly two years.

'Firing on all cylinders'

But the report shows it is technology where the temporary market “seems to be firing on all cylinders” – as co-author KPMG put it (albeit referring to hiring universally).

In fact, IT contractor demand hit 69.3 in May; up from 62.1 in April and 64.0 in March (any score over 50.0 signals monthly growth), and versus 53.5 in December (when growth returned).

But the growth in demand for techies is so breakneck that the REC’s Kate Shoesmith issued a warning.

'Flexible and hybrid work'

“Employers must think about how they can attract the staff they need, for example by looking at the wage and benefits package on offer," she said. "There is particular demand for more flexible and hybrid work.”

Deputy CEO at the Recruitment & Employment Confederation, Ms Shoesmith also said the government needs to get involved, by “improving access to work and opportunities for everyone.”

At KMPG, its skills, education and productivity head Clair Warnes agrees.

'Worrying'

“The deterioration in staff supply intensified this month, with overall candidate availability declining at the quickest rate since May 2017.

“This is a worrying trend and the message is clear: we need businesses and recruiters working alongside government to urgently address the skills gap.”

And confirming technology to be one of the worst affected industries, the confederation’s Mr Carberry posted: “For governments, shortages will be an issue in some sectors very quickly - driving, IT and nursing spring immediately to mind.”

'Short supply'

Despite the characterisation of skills scarcity as incoming problem, the REC’s May report shows a considerable list of IT specialisms in “short supply” already.

The permanent market is suffering with a shortage of applicants skilled in BI, C#, CAD, Data, Data Science, Database Development, Development; Java, Maximo, Technical Sales, Technology, IT and Digital.

The contractor market is short of candidates skilled in Automation Testing; BI, CNC, Data Science; Database Development, Development, Java, Software, Technology and IT.

'Stepped up a gear'

In the period covered by the REC’s report, Indeed says job placements on its website "finally surpassed their pre-pandemic level."

Speaking last week, the site’s economist Jack Kennedy reflected: “Recovery had been slow but [it has now] has stepped up a gear in recent weeks, as the economy reopens.”

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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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