An IT contractor recruitment turnaround is here – even if you’re not seeing it just yet

Even if it emerges – and all the signs are that it will – the turnaround in the IT contractor jobs market in March 2024 probably won’t catapult us back to the heyday of 2022, which for all in the tech sector was probably the best in our careers, writes Matt Collingwood, boss of VIQU.

So with clients still proceeding with caution, we’re not back to where we all want to be, not yet anyway. But the green shoots are definitely there, meaning last month the temporary technology jobs market in the UK unquestionably turned a corner.

Future starters of temporary IT roles are at a 23-month high

Just look at our ‘Future Starters’ -- contractors who have gone through an assessment/interview process and are due to start with a client in the future.

This start date can often be within a week to six weeks. Well, looking at our future starters, contractors on assignment will grow by 23% between January 2024 and May 2024. This is the biggest growth period for us since May 2022.

Pipeline? In IT contractor project terms, it’s up 8%

Look too at our ‘Pipeline.’ This is when we speak to clients about future projects they have which will require contractor resources.

We measure the value of this pipeline based on the potential GBP which our business would generate. And pleasingly, we forecast for Q2 2024 to be up by 8% on Q1 24, with H2 24 being up by 12%.

What clients are telling us about why they’re gearing up now for IT projects

Interestingly, when asked the reasons for the increased pipeline of tech projects, the most common answers from clients are:

• “We’ve put this off, but it now must be done,” and;

• “We’ve had budget approved”.

But there is still some reduced confidence from clients, and perhaps the best indicator of that is permanent IT hiring.

Longer candidate assessments

The requirement-to-offer stage, in terms of the total time, has increased by a mega 140% compared with the average time in 2022.

Back then, organisations moved fast to snap up contract resources, or knew they’d just go without. Currently, with techie full-timers, end-users are taking their time and spending longer to assess these candidates.

Rates = no change

Potentially a further sign of hesitant clients is that we’ve not seen any change in IT contractor pay rates in Q1 2024.

We did see new temporary tech roles released in 2023 and on average, these were at lower rates than their equivalents in 2022, yet there has been no tangible dip between the end of last year and now. So although rates have not gained in 2024, they've not declined either.

Contractor availability

This week’s REC Report on Jobs talks of candidate availability among temps rising (in March 2024) for the 13th successive month. The report says the rate of growth also accelerated, reaching its highest level since November 2023.

But contractors in IT looking for new assignments in Q1 24 are down in volume according to us – at least when compared to our Q3 23. That said, July-September 2023 was the worst quarter I can remember since 2008!

Overall, the volume of IT contractors applying to us as of Q1 24 is down by 22% compared to Q3 23, which suggests more contractors are on assignment/not looking for work.

However, tech contractor availability is still up by 31% compared to Jan-March 2023 and April-June 2023. So for now, the trend for IT contractors looking for work is still in decline.

Numbers that don’t allow (timely) confidence

If it all changes, and we suspect it will (for the better), we’ll let you know and pretty speedily!

Indeed, we’re noticing that some stats shared by larger staffing corporations are based on 'old' data, i.e. what those corporations billed their clients for services performed by their contractors. Although this gives some insight into the hiring market a few months back, it might not reflect current trends, nor the confidence IT contractors should have.

Lastly, a caveat…

Finally, although we’d wager that March 2024 was the turnaround month for IT contractors’ prospects, we must end with a caveat. March and September are traditionally two of the strongest months in recruitment for new IT contract roles, anyway. And these two months have been peaks ever since I started in recruitment. But be patient - the consensus among our consultants is that it’s more than just a seasonal uptick that’s bubbling below the surface.