Demand for technology skills on a contract basis declined last month to 44.1 from 46.3 in June, shows Report on Jobs.
It represents the second month in a row where the decline in IT contractor demand has accelerated, according to data shared with ContractorUK by the report’s author, the REC.
‘Marginally sunnier outlook among businesses’
The Recruitment & Employment Confederation (REC) spoke in the monthly UK jobs report of “a marginally sunnier outlook amongst businesses.”
But IT contractor demand hasn’t grown for 23 months, according to the confederation’s July member billings, which were last ‘in the black’ (any score 50.0+) in August 2023.
It means that the recent on-off recovery in appetite for freelance tech skills is yet to amount to anything tangible, despite it being on the cusp of growth in May 2025.
‘Summer slowdown’
It also means IT contractor demand registered its third lowest score so far this year in July, with only February (41.3) and January (38.8) being lower on the REC’s index.
Ominously, perhaps, the agency body didn’t point out that July’s weak score in IT contractor demand coincides with one of the most popular times for candidates and decision-makers to go on holiday.
A fractional COO, Sarah Burton, did speak about a potential “summer slowdown” in IT hiring when the REC posted its generally downbeat jobs report to LinkedIn last week.
But potentially due to the REC’s silence, or its data, tech and AI strategy specialist Burton said she suspected the IT hiring downturn “might go deeper than that, and be a trend.”
‘Dramatic decline in tech staff demand since mid-2022’
David Gadd, a director at TechCyber Recruitment Solutions, which places both full-time and freelance techies, confirms that it is the long tail of a downward trend.
“Yes, I would say that is a true reflection. Since mid-2022, we have seen a dramatic decline [in tech staff demand],” he said.
The REC’s full dataset indicates mid-2022 was actually rather buoyant for its tech sector member agencies, with the IT contractor index showing 64.5 in June and 61.1 in July.
Furthermore, the dataset shows IT contractor demand first stopped growing a year later -- in early-to-mid-2023, notably May (47.6) and June (48.6).
‘No V-shaped recovery’
It’s a happening of some two-plus years ago that has stuck with the REC’s deputy CEO Kate Shoesmith.
After last week’s publication of Report on Jobs (RoJ), Shoesmith explained in an online thread:
“What we find most interesting is that other ‘ups and downs’ in the labour market show a 'V-shaped' recovery. They are relatively quick.
“If you look at the trend line back to when the [RoJ] survey started in 1997, it has this ‘V-shape.’ Even in Covid.
“But this has been a flat market for over two years, making it a very different [animal] for businesses and for workers.”
‘Rachel Reeves should boost jobs market at Autumn Budget 2025’
Shoesmith believes Autumn Budget 2025 is the next opportunity to break the deadlock.
The chancellor should use her currently unscheduled statement to stabilise employers’ “cost-base,” she said, to support growth and “boost the jobs market.”
James Quarmby, founding partner at Stephenson Harwood, sounds like he hopes Rachel Reeves listens to the confederation.
‘Higher input costs without increase in output’
He says: “Labour’s rise in employer NICs…raises input costs for businesses without any corresponding increase in output.
“As firms seek to protect profit margins, these additional labour costs have been passed onto consumers in the form of higher prices, which has increased inflation.
“While the measure was intended to fund public services, its short-term effect has been to exacerbate inflationary pressures in an already fragile economic environment. This has led to a decrease in economic activity and business confidence. The government needs to change the narrative and quickly.”
Earlier this month, a group of 1,500 business leaders polled by KMPG said the chancellor should support them at her next fiscal update with “business profitability” measures.
The only Autumn Statement 2025 announcement that more business leaders (45%) were keen for Reeves to make was the adoption of new technology.
‘Complexities of AI adoption’
But technology and profitability appear to KMPG chief executive Jon Holt to now be part of the same equation.
In the RoJ, which the professional services firm co-authors, Holt wrote: “The labour market cooled in July as chief execs held back from increasing their recruitment budgets.
“Economic uncertainty, the complexities of AI adoption and global headwinds are all weighing on business planning.
“[And] many firms will continue to pause major investment decisions until there is greater clarity in the autumn.”
‘Technology skills In short supply’
In July 2025, shortages of IT skills for full-time jobs included AI Developers, Augmented Reality, Virtual Reality, Data Scientists, Full Stack Developers, LLM Engineers, SMT Engineers, Software Architects, Software Engineers, and Technical Roles.
REC members also reported shortages of Automation Testers, Data Engineers, Developers, Senior IT Engineers, Cyber Security expertise and IT/Technology/Software skills for permanent positions -- and all eight were “in short supply” on a contract basis too.
At the same time, the temporary technology jobs market was additionally, uniquely scarce of contractors skilled in Business Analysis, Software Sales and Data Architecture, the report says.
