IT contractor jobs market fell in February 2024 to a 42-month low

The UK jobs market for IT contractors dramatically lost its footing in February 2024, falling to its lowest ebb for three-and-a-half years.

Even the footing it had gained – in January – was ‘in the red,’ but at least it represented a tangible uptick on temporary IT hiring in December.

Now at 45.4, versus 46.2 in Jan and 45.5 in Dec (with 50.0 signalling growth), contract IT hiring has gone the way of the temp market as a whole.

“[February saw] a concerning increase in the decline in temporary billings, to the lowest performance since the middle of 2020,” says the REC, which produces the figures in Report on Jobs.

The REC was referring to temporary staff hiring overall – but IT is no different, with February being the weakest month for contractors since July 2020 (41.6).

'Lengthening decision-making'

For IT candidates, it means a jump in time-to-hire, as low “confidence and economic uncertainty are lengthening decision-making cycles.”

Neil Carberry, CEO of the Recruitment & Employment Confederation (REC) fleshed out his assessment online, following the report:

“[This longer] decision-making…likely in a way that is now overly cautious, [is] perhaps driven by the news of a technical recession,” he wrote.

“Unless you are in a sector with critical shortages, [your prospects have] now cooled.

“[And] today's weakened numbers on temp [hiring], show that firms have stayed their hands [since January]”.

'Slightly concerning'

Andy Hallett, a former director at tech sector-focussed hiring giant SThree, called the REC’s Feb findings “slightly concerning”.

“With lowering wage inflation and a reduction in vacancies, UK policy should return to a growth focus,” urged Mr Hallett, boss at RecWired.

“The Bank of England risks turning this into a deeper recession than it need be.”

'Chief executives being held back'

For businesses, the REC’s findings will serve to confirm the sense of frustration that many senior decision-makers are already feeling.

“Chief executives tell me they are ready to invest and grow - including taking on new staff,” says KMPG senior partner Jon Holt.

“Yet the reality is they’re being held back by the prospect of weak demand.”

'Still jam tomorrow, but tomorrow maybe a little further off'

That ties in with Carberry’s ‘TL;DR’ post on the market, entitled; “Still slower; still jam tomorrow [but] tomorrow maybe a little further off.”

Not that recruitment agencies are being advised to sit on their laurels and wait it out.

“[Is] February…a sign of harder times to come, or [is] the worst behind us?” asked the REC’s deputy CEO Kate Shoesmith.

“What if this is just the market as it is right now. Our job [as recruiters] is to make the best of it, educating clients and candidates about the reality of the market right now and what to do in the immediate here and now.

“That's hard work - but when was it not? And, undoubtedly, there are external measures that could inject more confidence into the system overall. Which is why we'll all be looking at the BoE's [March 21st] decision on interest rates”.

'Understand your job numbers'

RecWired’s Mr Hallett issued some guidance to agencies of his own.

“For recruitment firms my advice remains consistent. Understand your job numbers and grow when yields support that decision,” he wrote.

The REC’s February report reveals there has been growth of a different kind.

'Short supply'

Asked to identify tech skills “in short supply,” REC agencies placing contractors cited a total of 10, up from eight in January 2024.

The 10 are; Automation Testers, Cyber Security, Data Engineers, Developers, IT, Linux, Software Design, Software Engineers, Technical Roles and Technology.

Recruiters tasked with filling permanent vacancies specified 12 tech skills shortages, notably; Software Engineers, Technical Roles, Technology, UX Developers, Cyber Security, Data Engineers, Data Scientists, DDaT, Developers, Full-stack Developer, IT and Software Architects.

'We are in Long 2023'

The confederation’s Mr Carberry reflected on Monday: “We [are taking] the view that we are in ‘long 2023,’ with the trends of last year persisting in the early part of this year.

“[February's] data suggests that is right. But that the upturn may come in the summer rather than the spring. Forward-looking data on both the economy and hiring is much more positive.”

The REC CEO finished with an appeal (which the confederation has since indicated Spring Budget 2024 didn’t adequately answer): “Building confidence back up matters. It is a job for recruiters with their clients - those who move early will be better positioned - and for economic and monetary decision-makers, who now need to step up.”

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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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