Contract IT jobs market tries to shrug off 54-month low

The UK contract IT jobs market in December 2025 sat between the economy being shut from covid and then reopen from the pandemic.

Measuring 40.7, last month was not as bad for IT contractors as June 2020’s lockdown (20.9), but it was shy of its first month reopen (41.6).

The 40.7 score represents a tiny 0.5-point dip on November 2024, when demand for freelance technology skills was 41.2, showed agency body REC.

It also represents the weakest level of IT contractor demand for 54 months -- four-and-a-half years, according to Recruitment & Employment Confederation (REC) data obtained by ContractorUK.

‘December is always slower’

But “let's be clear, December is always a slower month,” says the REC’s Neil Carberry, trying on LinkedIn to put the data in context.

He conceded that UK tech recruitment overall (so not just temporary) was “still weak” in December 2024.

The REC’s chief executive, Mr Carberry added: “The real story on where we are, will come through in Jan and Feb, as 2025 plans take flight.

“But the signals from December were very clearly that firms have become more cost-conscious [of] the post-Budget NI raid [effective from April 6th 2025].”

‘Employers in a weak mood’

The REC’s Report on Jobs agrees on employers, as it talks of a “weak mood” inside “some” businesses.

A separate jobs study indicates that, on the ground, such weakness might be to blame for a 40%+ decrease in Software Development roles.

Between Feb 2020 and Oct 2024, job site Indeed.com also counted a more than 40% decrease in IT Operations & Helpdesk jobs.

The two pools of opportunities have narrowed further since October; for SD applicants from 57.3 to 56.8, and from 67.5 to 66.2 for IT&H applicants.

‘Hit to employment and wages’

Both scores on Indeed’s latest index (as of Jan 10th) indicate only slight reductions, in line with the minor Nov-Dec REC billings dip.

Nonetheless, the same pressures on end-hirers are identified by the job site.

Indeed senior economist Jack Kennedy, said on December 12th -- so in the heart of the period covered by the REC agencies’ billings data:

“The combination of a hike in employer National Insurance contributions and lowering of their threshold, higher minimum wages, increased business rates and a new workers’ rights package have been widely met by warnings of a hit to employment and wages.”

‘Caution is the watchword’

Mr Kennedy continued: “At the higher-paid end, knowledge-work occupations have experienced a marked slowdown in hiring over the past couple of years, amid a so-called ‘white collar recession.’

“With business confidence remaining subdued amid still-restrictive monetary policy and ongoing global uncertainty, ‘caution’ is likely to remain the watchword for many employers.”

This cautionary approach at a time when key areas of IT roles are in retreat may be behind the lumpy (at best) IT job-seeker experience of late.

‘Bamboozled’

A software developer with NHS England experience shared this New Year:

“I am writing this post totally bamboozled, frustrated, and ready to give up, at the current recruitment world.

“Before Christmas, I had been offered a role. [The recruiter] said the contract may be sent before Christmas but due to annual leave, festive season, manager sign-off [etc], it may be after.

“Roll on to the start of this week, and after sending yet another email I was told by the recruiter that they can ‘assure’ me I will obtain the contract by the end of the week 'at the very latest.'”

“Roll on to today [w/c Jan 13th], and I’ve just had a call with the recruiter telling me [that the client is] withdrawing [the role].”

‘Four days of interview preparation -- came to nothing’

A senior IT support engineer showing an ‘Open To Work’ LinkedIn profile went one closer to being so near but still so far.

“The company wanted to set up an interview right away. The manager said he would call a day before for interview prep. I spent FOUR days prepping, so [I was] happy.

“But that prep call never came. I sat on teams waiting for an interview for almost an hour.”

“The only part [of an email from my recruiter I got afterwards that reassured me is that apparently] he’s a difficult manager to deal with.

“[Still], it was the most unprofessional and honestly heartbreaking thing a company could do. It was to the point where they [had even] sent me on-boarding-type materials.”

‘Project due to renew me with a three-month extension got put on ice’

A pragmatic Business Analyst also posted to social media in December 2025, to further highlight how it is end-users (not agencies) who ultimately call the shots:

“One is never aware of the full picture. Situations change. Or people internally are similarly left on tenterhooks.

“I was told that I was [to be] renewed for a third, three-month extension on my current contract. But while I was waiting for the new contract to be signed, there was a decision made -- to put my project on ice.”

‘We're not in a bad jobs market’

Despite being without desirable outcomes for the three candidates, such market activity last month won’t come as a surprise to Kate Shoesmith.

“There were 1.4million active job postings in the UK in December, traditionally a hiring low point in the year,” Shoesmith, the REC’s deputy CEO said on Friday.

“I've said it before - this isn't a bad jobs market.

“And I've had loads of chats this week where people are telling us that there is an appetite to get going; [with] work to be done, [and] assignments and placements to be filled.”  

‘New vacancies coming through the door’

Julia Sherlock, senior consultant for technical and engineering roles at agency Prime Appointments said -- just last week:

“We are getting busier with new vacancies coming through the door.”

Mark Staniland, CEO at Freedom Recruitment Group echoed the sentiment on Jan 17th: “Several major recruiters [are] currently delivering their results.

“And they’re talking about difficult market conditions. [But] we as an organisation supporting many boutique specialist recruiters are seeing significant growth.”

‘It’s a tough but possible jobs market for IT contractors’

Yet it isn’t just niche agencies sounding resilient, defiant and determined:

“Many times I’ve not been first choice or even second choice,” a Computer System Validation contractor confessed earlier this month. “But I have still landed the role eventually.”

Of November 2024 constituting a four-year low in IT contractor demand, a DevOps specialist braved: “It may be tough [out there], but it’s still possible.”

‘Short supply tech skills’

As to where those possibilities are more likely to be found, 20 tech skills were categorised in December as being in “short supply”.

Six of the 20 were scarce on a contract, freelance or temporary basis too -- Cloud Engineer, Cyber Security, Developer, Full-Stack Developer and Technical Roles/Technology Skilled.

But the 14 uniquely scarce to full-time positions according to REC member agencies in December 2024, were; .Net, AI Developer, Automation Tester, Data Science, Digital, LLM Developer, LLM Engineer, Software Architect, Software Developer, Software Engineer, CAD, Digital, Technical Sales, and Software Sales.

‘Business will need new talent in 2025 -- and confidence’

Jon Holt, partner at KPMG, said: “The hiring market could continue to show signs of caution in the short-term, as businesses pause to take stock of higher employment costs, a more gradual pace of interest rate cuts and rising inflation.

“However as 2025 progresses and UK economic growth picks up, businesses will need new talent.”

Sounding aware of Spring Budget 2025 on March 26th, the REC’s Mr Carberry said: “The private sector is what drives growth, but to fund public services via tax, they need to be successful themselves. From the Employment Rights Bill, to NI, to infrastructure and skills -- there is a lot for government to address quickly to boost confidence.”

Profile picture for user Simon Moore

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.
Printer Friendly, PDF & Email

Contractor's Question

If you have a question about contracting please feel free to ask us!

Ask a question