For IT contractor hiring, budgets were fully constrained even before UK recession – but there’s still not a single rate cut in sight

Even before news of the UK being in recession broke on February 15th 2024, we would give a score of ‘10’ to denote how constrained the budgets of contractors’ clients are, with ‘1’ being totally unconstrained and ‘10’ being fully constrained, writes technology and telecoms recruiter Pendy Hou, a delivery team leader at First Point Group, London.

Hiring budget constraints score: 10/10

However, we are always conscious of our clients’ budgets and prioritise working within the allocated budget.

Where a role is niche or particularly challenging, we may have to put forward a contractor if they are slightly over-budget – just to give the client an idea of the level of experience at that additional level of budget.

Despite the r-word (recession), there’s no contractor pay reduction; now or expected

But we have not seen a reduction in contractor pay rates since the UK was officially declared in recession earlier this month. It is still too early for any recession-induced reduction in rates to apply anyway, but we also don’t anticipate a reduction either.

As to which party out of contractors or clients is more likely to utter the ‘r-word’ at contract renewal stage, it’s likely to be contractors.

In fact, some contractors have already referenced the related “cost of living” as to their reasons why they feel a rate increase is justified. But contractors should also consider that the recession is felt by their end-user too. Therefore an increase in rate should be realistic and justified.

All that glitters…

If better paid roles appear to exist, contractors should be speaking with their recruitment agency or actively chasing them up independently.

However, should better paid opportunities emerge, then contractors should consider how many other candidates will be competing for that same role.

‘Open To Work’

Personally, my current perception is that the jobs market contains the most people out of work, or looking for a role, for the last two-to-three years.

At the time of writing, there are ‘Open To Work’ candidates all over my LinkedIn timeline! And related to this high activity by candidates, typically in a recession, the only impact we see is that contracts do not always get extended.

Yet one of the reasons I went into telecoms recruitment is because it is always forward-thinking. By this I mean that recession or no recession, there will always very likely be demand for faster and better technology. This trend isn’t going to reverse!

Contractors we’ve placed aren’t among the 42,000+ tech job cuts in 2024

Before compiling this snapshot of contractor recruitment since the UK was announced by the Office of National Statistics as in recession, it was pointed out to me that there have been 42,457 technology job lay-offs so far in 2024.

But we ourselves have not seen job or contract eliminations, and would be surprised if we do.

For end-clients, we would advise that such outright job cuts would be risky as it would increase the risk of contractors leaving key roles on essential projects.

In addition, clients are no doubt aware that the UK recession is reasonably shallow – the economy shrank by 0.3% between October and December 2023, following a 0.1% contraction between July and September.

Questions, and my own personal answer…

Could the UK economy be better? Yes. Could the recession have been worse? Absolutely.

Personally, I think we as a nation are ultimately in charge of our own destiny and if we can all dig deep and knuckle down over the coming months – IT contractors included, then we can help the country and the economy grow again.