IT contractor demand in May 2025 ratcheted up, verging on growth

Demand for IT contractors improved in May 2025, ratcheting up to its highest level since November 2023.

Temporary billings in IT rose from 45.6 in April to 48.0, positioning demand for tech skills on a temporary basis at just 2.0 index points shy of growth.

A score of 48.0 in May represents the highest reading for the IT contractor jobs market this year; at any time in 2024, and since Q4 2023 (it was 49.2 in Nov.).

‘Encouraging signs in temp billings’

The Recruitment & Employment Confederation (REC), which administers the monthly index, says May 2025 saw “encouraging signs in temp billings.”

It looks extra encouraging because May 2025 is the “first set of data where we would expect to see the full immediate effects of the NI rise,” said REC’s CEO.

Neil Carberry, chief executive of the REC, added: “This is the first month with the full effect of the NMW rise [too].

[And while] the National Insurance Contributions rise will have stalled recovery…it hasn’t made the trend worse.”

‘Contractor pay rates ticked up in May 2025’

In a potential sign of higher employment costs, average pay rates for temporary workers “ticked up” in May 2025, Mr Carberry said in a social media post.

For temporary workers whose skills are in technology, recruiters signalled to ContractorUK that a dusting off of mothballed projects boosted them in May.

In an H2 2025 tech hiring outlook published this morning, Robert Half talks of “businesses…reassessing how they structure and allocate their resources.”

‘Reduced IT contractor availability’

VIQU IT says contractor CV submissions have fallen 34% since January, indicating “reduced contractor availability.”

VIQU’s Matt Collingwood says: “In tech especially, delayed projects are now critical, and businesses are turning to contractors out of necessity.”

He told ContractorUK that due to legislative changes, like “the Employment Rights Bill,” contractors are “once again…a flexible, cost-effective solution.”

‘Move forward with your projects’

Having just finished the hiring of a Business Analyst and Project Manager, Craig Ross, a consultant at Harvey Nash, said he received “hundreds” of applications.

Despite the implied healthy level of candidate availability, he too spoke of clients taking tech programmes off the shelf.

“For clients looking to hire BAs or PMs, now is the time to move forward with your projects”, Ross wrote.

‘Signs in May 2025 that things may be improving for BAs and PMs’

Phil Dancey of IntaPeople took to LinkedIn two weeks ago (in the middle of the period covered by the REC’s ‘encouraging’ data):

“The Business Analysts and Project Managers I speak to daily have been particularly hard hit.

“[So] you’re not alone if you’ve found the UK contract market extremely difficult recently….[but] there are signs that things may be improving.”

‘Increased permanent employment costs, and cautious green lights’

A Data Science, AI & Machine Learning recruiter, Dancey continued: “I’m not going to pretend that it’s thriving, but signs of stabilisation are finally showing.

“Contract rates are still nearly 30% down from last year but the decline has slowed significantly.  

“Contractors are a more attractive proposition than they once were due to the increased permanent employment costs.

“[And] job volume is increasing, [as] AI, Cyber, Data and Cloud projects are getting cautious green lights.”

‘Stabilising now, but Spending Review 2025 impact is next’

Unveiling Report on Jobs for May, the REC’s Mr Carberry last week spoke of “stabilising private sector demand” offering “a measure of optimism”.

Similar to how the employer NICs changes could have hurt demand, Carberry says Spending Review 2025 is next to hopefully bed in without disruption.

Sounding keen to protect fragile gains for temps in London (which is now “flat” after being in the red) and the Midlands (which grew), the REC’s boss said:

“The Spending Review delivered a big hit in terms of eye-catching spending on technology and energy.

“But the lack of announcements on workforce matters is badly out of step with its desire to build a deep pool of talent.

“With the Industrial Strategy imminent, businesses are looking for more than talk of renewal, they want a clear plan for an economic revival.

“One that acknowledges the central role of good workforce policy –beyond just employment rights. That means putting workforce matters at the heart of the agenda, not treating it as a compliance issue.”

'14 IT contractor skills in short supply in May’

Fourteen IT contractor skills were “in short supply” according to REC’s member recruitment agencies in May 2025.

Out of those 14 that were uniquely scarce in the IT contractor jobs market (insofar as they weren’t also in ‘short supply’ on a full-time basis), the REC listed Analysts, IT Support Specialists, IT Infrastructure, Productivity Engineers, Software Designers and Technology Designers.

‘Pent-up demand amid a need for IT contractors to adapt’

Steve Sully, regional director at UK recruitment agency Robert Half, told ContractorUK: “There is still pent-up demand in the consulting space around business transformation and platform implementation.

“The cautious hiring approach [in May] is primarily stemming from the looming changes in employment regulation and immigration rules.

“[But] for [tech] contractors it signals a need to adapt -- rates may flatten and competition could intensify. In this climate, both hirers and workers will have to be agile, balancing cost pressures with the ongoing scarcity of key technical skills.”

‘Six months of uncertainty for hiring businesses so far in 2025’

“Employers are still holding back on hiring,” said KMPG group chief executive Jon Holt, writing in Report on Jobs.

“The first half of this year has been full of uncertainty for businesses who are still trying to navigate cost pressures, technology advancements and global risks.

“Business leaders will want to see how the new trading agreements with the US and EU, government spending plans and the Modern Industrial Strategy will drive forward our economic growth. To boost the jobs market employers need to feel confident about the outlook”.