IT contractor demand falls unexpectedly, erratically, into the red

IT contractor demand fell unexpectedly and erratically in September 2023 -- so much so that it stopped growing entirely and is now shrinking.

Only one month prior, in August, agency body the REC said that the UK’s technology sector ‘needed temporary IT workers to support more projects.’

Back then, the UK’s temporary labour market for techies notched up its fourth consecutive month of growth, to a comfortable margin over the agency body’s 50.0 ‘growth threshold’ -- to 51.9.

But in the four weeks since, demand for contract IT skills fell back to align with the rest of the temporary labour market, slipping into ‘the red’ at 48.2, the REC found.

'Employers clearly nervous at economic uncertainty looking long-term'

The first since June 2023, the dip in IT contractor demand signals projects still need contract techies, but that such a need now ranks second due to a nagging concern turning pressing.

“Employers are clearly nervous due to the long-term economic uncertainty and budget constraints that are impacting businesses everywhere,” says KPMG’s Claire Warnes.

Writing in the Recruitment & Employment Confederation’s Report on Jobs, Warnes spoke of demand “losing momentum,” and the jobs market even “starting to look slightly precarious”.

'Lowest temp pay growth since March 2021'

For candidates like contractors, this more precarious market, triggered by economic concerns and characterised by budget constraints, means more subdued starting rates.

“Pay remains growing at historically high levels but the rate of growth for…temporary [staff] is the lowest we have seen since March [20]21,” the REC’s Neil Carberry said yesterday.

“[It is] some indicator…[that] a looser labour market and the topping out of inflation, have let some of the heat out [of headline] pay.”

Warnes agrees, saying “strong pay growth” has been a tight labour market’s doing for “several months,” but employer budget trims in September, “are now affecting the rate of starting salary”.

'Permanent IT staff shortage, with 17 techies now scarce'

It is not the only concern for the permanent jobs market which KMPG’s education, productivity and skills partner expressed.

Warnes said the UK economy now appears to be facing “long-term” issues like “skills shortages across a range of sectors,” notably “permanent IT staff.”

The confederation’s RoJ confirms that in September, as many as 17 technology skills were “in short supply” for full-time IT positions.

Five of those 17 were also scarce in the IT contractor market; Cyber Security; Developers, Software Engineers, plus IT and Technology generalists.

The remaining 12 sought-after tech applicants, uniquely scarce to the full-time market, are;  AI Developers, Analysts, CAD, Cloud Engineers, CNC, Data Scientists, Front-end Developers, Media, Software, Technical Leaders, Technical Sales, and Technical Support.

'Use standardised job titles'

September 2023 also saw a lack of IT contractors for Data Engineering and BIM Modeling contracts.

These are the only two IT skills uniquely scarce to the contractor market, shows the REC report, but for all opportunities, the projects behind them are being reminded of the importance of ‘clear labelling.’

“Use standardised job titles,” advised Wave founder Dave Jenkins, addressing end-users who want their adverts to be found by candidates using job boards’ internal search engines.

“Keep ad length between 250-300 words; include location (even if it's a remote position) [and] add salary specifications.” 

'Reduce the amount of applications'

A platform engineer last month posted that detailing pay in a job advert or description “can definitely reduce the amount of applications.”

The tip may interest those agents drowning in applications (“candidate availability for roles continues to rise, but not as fast” -- the REC’s Mr Carberry), but actually the opposite is true.

“Sixty-four per cent of candidates said they’d be more likely to apply for a job that listed a salary,” says IT recruiter Matt Collingwood, referring to a Gartner study published in August.

“[And] 68 per cent said they expected to see salary information in job postings…[which is why] we always advertise the rate”.

'Continuing trend of weaker demand, but with signs of potential upturn'

The clarification from Collingwood chimes with what Mr Carberry believes his agency members should in turn advise businesses.

“Where does this leave us?” the REC’s CEO asked of September's data, showing what he called a “continuing trend of weaker demand, but with signs of a potential [up]turn.”

“It's a powerful reminder…for businesses…[about] getting the offer and hiring processes right,” he said, then adding a stern warning to end-users:

“You can't win by low-balling [on pay], or running a process with poor candidate-care.”

'People like to know where they stand'

The CEO of staffing firm OA Recruitment, Laura Clark, echoed the need to do right by candidates.

“People like to know where they stand”, she wrote, in what she cautioned was as an uncharacteristically straight-talking LinkedIn post.

“If you feel a certain way or have higher expectations or have any kind of conflict with an individual, it's far easier to skirt around it and provide a lovely sh*t sandwich.

“I believe -- go in for the jugular, say it how it really is --- people like honesty, regardless of it hurting.”

'We received 11,425 applications for 20 jobs'

Clark was referring less about pay and more about candidate-feedback by agents.

Yet at IT recruitment firm VIQU, the advice is that candidates need to be realistic about the latter.

“‘Recruiters never call me after I send my CV.’ I’ve heard this [complaint] more than ever recently…[but] let's talk numbers,” began the recruitment firm’s boss, Mr Collingwood.

“Between June and mid-September 2023, and brace yourselves -- we received a staggering 11,425 applications for 20 jobs [and get this]; our adverts run for one week only.”

“If we assume that each qualification-call with a candidate takes about 20 minutes, that adds up to a whopping 4,000 hours over 3.5 months. To manage these 20 jobs alone, I would need 16 recruiters working full time, when one would normally manage it.

“So here's the reality check, and it's a hard pill to swallow. If the entire recruitment industry were to call every single candidate that sent their CV, we'd be on the brink of financial collapse within weeks.”

'Job market is rough right now'

However, it is the feedback which decision-makers give face-to-face -- in interviews -- that bothers one director-level candidate.

“The job market right now is rough… and I’m one of the lucky ones to continuously land interviews.,” the candidate began.

“In the last ten weeks, I have met and interviewed with 43 companies for mid-senior to director-level…roles.

“I consistently get through [to the] end rounds…[and] during the interviews, I hear ‘Wow, these are great ideas and now on my to-do list.’ ‘We have no negative feedback for you; you are a great communicator.’ [And] ‘You will definitely hear back from us’”.

Admitting she was “drained,” the professional job-hopeful continued: “After the interview process ends, I get emails [stating:] ‘We are no longer hiring for this role.’ ‘We filled this position internally.’ [And] ‘We chose someone with more industry-specific experience.’”

'Get better'

At OA Recruitment, its chief executive’s ‘no longer on the fence’ guidance -- as she described it to almost brace the timid -- could be helpful. And not just helpful to the director-level candidate approaching interview number 44, but to all others trying but ultimately not succeeding in the job stakes.  

“Being successful in your career is hard work and not many people are as honest about that as they should be,” Clark reflected. “[But] it's super easy to blame everyone else for your own failings. Yes -- bad luck CAN exist but the reality is, if you have failed -- it's likely due to something YOU have done along the way (or not done, in a lot of cases). Own your own sh*t and get better.”


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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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