Contractors’ Questions: How are IT contractor pay rates and demand faring?

Contractor’s Question: With most IT contractors apparently not billing for billable hours, and another majority of tech freelancers stuck on the same rate as last year, is the market really that glum? How did tech contracting fare in January 2024, for example? 

Expert’s Answer: It’s a tougher market for IT contractors at the moment. 

You don’t have to take just our word for it! A glance at the ‘big picture’ of recruitment agency performance usually tells you how the contractor market is performing. And in the month you’re asking about, Page Group’s UK profits emerged as being down by almost 20%.

Down, dropped, narrowed

Looking at our own business, in terms of pay for IT contractors, rates are down on this time last year.  

In Q3 2023 and early Q4 2023, we saw the biggest drop in IT contractor rates of the year.

Our ‘contractor book’ – that’s working contractors, has narrowed by 12% on this time last year. Broadly it’s a case of less contractor demand = less contractor opportunities.

IT contractor market pressures include…

But what are the reasons for less tech contractor demand?

Well, clients have reduced budgets and/or kicked their projects down the road.

In addition, clients are currently looking 3-6 months ahead, not the standard 12-18 months ahead. Significant here is the cost to organisations of funding projects, which is more extensive with interest rates being at their historically high level.

Assignments, pay rates and 2024 outlook 

But let’s end on a high. The volume of IT contractors looking for their next assignment reached a record high for our agency in October-December 2023. 

However the final quarter quietened down a little, which we suspect was partly down to the time of year. That said, in terms of IT contractor pay which is what you mainly enquired about, we don’t anticipate much change to contractor rates due to supply and demand, so our current rate forecast for 2024 is pretty flat. 

The expert was Matt Collingwood, managing director of IT contractor jobs agency VIQU.