IT contractor rates up 3.3%, says Hays, as six in 10 clients pay more for temporary tech skills
Rates for IT contractors in 2023 have increased by an average of 3.3%, in defiance of the uncertainty seen in the UK economy over the last 12 months.
Unveiling its Technology Contractor Day Rate Guide 2023, Hays will today say the 3.3% uptick stems from the 61% of clients who paid more for contract IT skills in the last year.
Cyber within Financial Services led the pack, with such contractors placed by the recruitment agency commanding an annual premium of almost double-digits -- 9.3%.
‘Mostly below inflation rate rises for IT contractors’
But most rises were ‘below inflation’, Ian Storey, director of Hays Technology acknowledged to ContractorUK, which yesterday partnered with Hays for the guide’s virtual launch.
“Given cyber-attacks continue…and security is becoming more of a priority for organisations, it’s no surprise…day rates for [even non-financial] cyber professionals [are also up] -- by an average of 5.8%,” he said.
“[And overall] despite the uncertainty seen in the economy in the last 12 months, contractor day rates have risen -- by an average of 3.3%.”
Mr Storey continued in a statement last night: “We predict this trend will only continue. In the next 12 months, 65% of clients expect rates across the tech sector to increase again.”
‘Rate increases for at least six key IT contractor candidates’
Hays found that cloud-based infrastructure assignments in financial services pay out 5.2% more (versus 4.9% more for non-cloud infrastructure assignments).
Project/change contractors and software developers similarly working at banks and financial institutions are likewise up on last year, by 3.1% and 2.1% respectively.
But the Hays rate guide shows IT “leadership” roles at FS clients saw the lowest year-on-year increases, up just 1.1%, placing them behind BI & Data Science contractors (up by 2.0%).
More than eight in 10 end-clients who increased their contractor rates over the last year told the FTSE-listed recruiter they did so as a “direct result of the rise in the cost-of-living.”
But Hays specified that the 5.2% uptick on cloud infrastructure roles isn’t necessarily confined to FS, as it reflects the many organisations transitioning from on-premises working.
A boutique hiring firm placing contractors solely in FS says it’s hard not to notice on London’s Square Mile the virtual replacing the physical, which it confirmed is buoying rates.
‘City firms scrambling for high-quality IT project folk’
“We’ve seen an ongoing scramble for high-quality IT project folk, ever since the pandemic, as many on-premises City firms shift to the Cloud,” says the firm, Bowers Partnership.
“So yes, rates have held nicely for the in-demand skillsets. Think project managers, developers -- and the more BI-focussed the better. And all contractors in Data and Cloud.”
The firm’s managing director Natalie Bowers says she doesn’t like to mention IR35, “but it is fact that we’ve seen rate inflation since the dreaded private sector off-payroll rules hit.”
End-clients have been known to stump up more cash to compensate for limited company contracting being potentially much more taxing under the rules.
But the framework of April 6th 2021 (and the framework of April 6th 2017 in the public sector) now acts as financial rub for many.
‘Extensive IR35-related reorganising’
Bowers explained her assessment: “If you’re a contractor enjoying what would seem to be -- on the face of it -- a stonkingly high daily rate, then you’ve got to hope.
“And the hope is you’re part of the small minority [in FS] managing to get outside IR35 gigs, rather than the majority of poor souls netting under 50% take-home on inside IR35 roles.”
In the Hays rate guide, which talks of “extensive reorganising” in relation to the revised Intermediaries legislation, Storey sounds aware contractors want to maximise their rate.
‘Hone your IT contractor skills where it’s hot’
He encourages contractors to “gauge…whether your skills and expertise are being paid what they’re worth,” and to develop a “better understanding of how much you could be earning.”
“Hone your skills in the most in-demand areas,” the Hays technology director adds.
“The areas of highest demand for clients, and therefore the areas with the most opportunities for contractors, lie in specialist skills such as cloud and infrastructure, data and analytics, cyber security and artificial intelligence. Don’t forget to hone your soft skills too.”
‘Outside IR35 outweighs a higher rate -- as a renewal request’
Historically, pay is the main motivator for contractors to accept or reject a contract, but conversationally at renewal, it’s now in second place.
Of the new hierarchy, Matt Collingwood of staffing firm VIQU says: “I now have more conversations with contractors about moving them to outside IR35, than I have about rate negotiations.”
‘Contractors don’t want to rock the boat’
Collingwood further told ContractorUK that only about 20% of extension-conversations see the contractor put in for a rate rise.
“What’s driving this?” he asked. “Contractor confidence is low. They are aware that the language being used by clients is around ‘costs’ ‘savings’ and ‘budget cuts.’ In what has become a bit of a quieter market, they don’t want to rock the boat. Longevity is more important than rate.”
Work-life balance is almost as important at rate -- but not quite, according to Hays, which found after pay, work-life balance is the top priority when weighing up a new opportunity.
‘Work-life balance – it means different things to different people’
Life coach Shwezin Win told ContractorUK that she isn’t surprised that a hefty 47% of Hays contractors prioritise a contract’s work-life balance credentials.
“It’s the biggest area of importance for most people, often including contractors and especially if they have caring responsibilities.
“But the ‘balance’ in ‘work-life balance’ means different things to different people,” she says. “One of the biggest mistakes is thinking balance is about ‘time’ -- i.e. if I can work fewer hours or if I can have a day off.”
Asked what contractors struggling with work-life balance looks like, the founder of Win At Life replied: “One issue is ‘perfectionism’ -- that’s what I call it when contractors aren’t able to let things go, to the extent they end up working when they shouldn’t be.
“Another is dealing with a client’s stakeholders who can be demanding. The worry is often for their commercial reputation, fearful they’ll be branded as ‘the contractor who can’t hit targets.’”
Of Hays’ findings, life coach Ms Win further reflected: “And that impacts work-life balance, because such a thing is constantly on your mind while you’re at work or home, regardless of your rate. It’s little wonder that work-life balance is the major contractual concern for 47% of those Hays polled.”
‘Hybrid working model’
In the agency’s contract rate guide, clients -- as well as contractors -- are given a list of recommendations to help them overcome challenges.
“In order for clients to attract contractor talent in a skills short market, they should continue to offer a hybrid working model,” one of the recommendations begins.
The recommendation from Hays concludes: “Our research shows [a] majority of contractors would prefer to work mostly remotely, with some time spent in the workplace. So organisations ought to offer flexible working where possible. The most crucial way to compete for talent is to acknowledge that, aside from day rate, work-life balance matters most to contractors today.”