Contractor UK Market Report - Summer of cheer

The football may have ended badly, and the arrival of sunshine may make work seem a chore, but the signs are that the next few months will bring good news for IT contractors.

For the moment, average rates across the ten most commonly requested IT contract roles are almost exactly as they were at the end of Q1. The rate currently sits at £28.23 per hour, a barely perceptible change from the £28.28 noted at the end of March. These figures come from itjobswatch.co.uk, and are based on more than 100,000 advertised IT roles.

Non-movement may not appear, at first, to be good news. But it shows solidity after two years of giddy fluctuations. There was demented zig-zagging through 2008; a slow decline then harsh drop in early 2009, and an edgy recovery at the end of that year that eventually petered out. But the first two quarters of 2010 have seen hardly any movement, and those in the industry see improvements ahead.

Matthew Smith is MD and CIO Consultant for UK regions with Harvey Nash. He says that, "demand for contract resource remains robust, as do the rates, in our experience."

But as always, there is no uniform situation. "Prices in 'commodity technologies' – that is technologies that can be easily found offshore, are going south," says Smith, "and roles with a business-facing dynamic are going up."

This is particularly good news for business analysts, who the jobswatch figures show have seen by far the biggest leap over Q2, from £22.75 per hour to £32.25. Smith sees this as an increasingly common trend. "IT departments are increasingly focusing on bridging the gap with the business," he says.

"This puts a premium on BAs. In Harvey Nash's recent Global CIO survey, 44% of the respondent said that BA skills are the highest priority. A key piece at our recent CIO events has been around IT alignment and business engagement. How can the technology function understand the business processes, and in turn look at ways to increase efficiency through - at times - the use of technology? Business analysts or business relationship managers are a key enabler to this."

But BAs may also be benefitting from broader positive trends. According to figures from the umbrella company giant group, there are far fewer IT contractors suffering from long-term unemployment than six months ago. Then, they say, 10.1 % of IT contractors had been out of work for three months or more, compared to just over 6.8% now.

The firm's MD, Matthew Brown, sees this leading to rate rises sooner, rather than later. "Inevitably, as demand recovers and joblessness falls we will see a return to end users out-bidding each other for skills, which should lead to rate increases," he says.

Numbers for recruitment body the REC provide further succour. Recent figures claim that "Demand for ICT labour has increased by 4%" over the last few months. According to Jeff Brooks, the chair of the technology chapter of the REC, "At ground level, members say that things have improved markedly from the low points of late 2008 and early 2009." Specifically, the REC highlights roles for Systems Developers, Architects, .NET and SQL SVR as being on the up.

Our jobswatch figures partially back this up, with Architects seeing rates rise from £37.50 to £40 over the last quarter, but Systems Developers rates have barely moved, and .NET roles have taken a small dip.

Java rates have seen the biggest downward dip among the 10 most commonly requested skills in jobswatch's figures, falling from £36.25 to £29. But, this may not be reflected everywhere. Presented with the figures, Harvey Nash's Matthew Smith commented that, "we have a team that focuses specifically on Java developers and the feedback here is that over the last six months rates have increased but are still lower than they were two years ago."

So where are all the new jobs coming from? Both Matthew Smith and Matthew Brown agree that finance could lead the way. "Many businesses in the finance sector are recruiting. Some due to growth and some as a result of mergers, acquisitions and collaboration," says Smith. "We've noticed an increase in rates, which is simply down to good old demand exceeding supply."

Brown notes that, "the wave of mergers in the sector precipitated by the credit crunch and the resultant need to integrate IT systems is a major factor behind the resurgence in demand for IT contractors in the financial services sector."

Every credit crunch cloud, it seems, has a silver lining for contractors.

Matt Farquharson

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