Top 10 IT contractor rate trends and predictions for 2023 and beyond
Many organisations are continuing to invest heavily in their technology teams to deliver better solutions to consumers and enable digital transformation – and we expect this to continue well into 2023.
However, as technology skills shortages become more acute, demand for IT contractors is extremely high – which is likely to push day rates higher and drive more competition for talent.
So, asks James Hallahan, Hays, director of technology solutions for UK & Ireland, what can we predict for day rates and trends for 2023 and beyond?
1. Day rates are likely to increase again in 2023
In our 2022 contractor day rate guide, day rates in technology rose by an average of 5.3% - a sharp rise from the 0.8% increase the year prior.
With demand set to increase, and the cost of living continuing to rise, organisations will need to keep their day rates competitive to attract contractors. Some 59% of organisations have already indicated they will raise pay again for contractors in the 12 months ahead.
2. Contractors will stay in the driving seat
With the anticipated demand for contractors showing no sign of slowing, contractors will remain in the driving seat when it comes to picking what projects and organisations they work for.
Many aren’t willing to take a contract that isn’t outside IR35 for example, and many won’t compromise on not having some form of flexible or hybrid working.
3. Speed to hire will be essential
Organisations won’t be able to afford to miss out on good contractors in order to keep project running smoothly.
Speed to hire is essential -- otherwise you risk a contractor being snapped up by another organisation. Keep the number of interviews to a minimum and make sure your hiring processes are as efficient as possible to avoid losing contractors during the interview process.
4. Soft skills will be less overlooked
Typically, hiring tech contractors is a case of assessing good technical skills and experience. However organisations are prioritising good ‘soft skills’ more than ever too. According to our research, 64% of employers are most in need of professionals with the ability to adopt change, representing an increase from 55% last year, as well as strong problem-solving skills (57%).
5. Contractors to opt for remote work where possible
Tech contractors value a positive work-life balance and the option to work remotely. Yet our research shows that although almost half would prefer to work fully remotely, only a quarter of organisations actually offer this. With competition high for contractors, giving the option to prospect talent to work remotely all or most of the time could tip the scales in your favour.
6. Organisations hiring contractors will need to work on their talent pool
With demand for tech contractors so high, think about how you can broaden your talent networks.
You may want to give more consideration to contractors who meet most of the technical ability requirements, but who show they can pick up new skills quickly. How about rethinking the way you connect with contractors? For example, our CodeCo competitions link organisations with top contractors via coding competitions.
7. Neither clients nor contractors will be able to afford not upskilling
In a competitive hiring market, employers need to consider offering learning and upskilling opportunities within a contractor’s package.
There is also no reason why you can’t take time out of your work to upskill as a contractor. Although your skills are in high demand now, don’t stop investing in improving your skillset. Upskill wherever possible and keep your certifications marketable so you can continue increasing your day rate over time.
8. Organisations will need to better articulate the projects they can offer contractors
Contractors want challenging or interesting projects to work on. If your role fits the bill, shout about this when advertising roles and interviewing contractors.
Perhaps your role has a strong social value? Or maybe it offers the chance for someone to hone a particular set of skills? Make the outcomes of the project clear, and you may be able to secure someone willing to work on the project for a longer period of time – and who is really engaged.
9. IR35 will remain as important as the rate
IR35, or specifically the IR35 status of an assignment, will continue to rank alongside the rate as one of the most determinative factors in accepting, or rejecting, a role.
While it’s hard to foresee the proportion of organisations struggling with IR35 reform increasing to beyond the 8 in 10 already finding the framework difficult (partly because reactions to the new rules are maturing), the dislike of the April 2021 rules won’t significantly abate.
10. Clients with a planned approach to hiring contactors will float to the top
As the hiring landscape will retain its competitiveness in 2023 – especially for tech contractors – the further that end-clients can plan ahead to anticipate what talent they will need (and when), will put their operations in a better position.
Small things like letting potential candidates know what projects are coming up, and what contractors can expect from the organisation will give clients the edge, as it means contractors can plan for the opportunity themselves. The better clients will be agile too – and for specific skills commanding top whack, will consider working their projects around budget and talent-availability.