Temporary IT staff demand continues to ease

Growing shortages of some computer skills look set to act as a ballast for the temporary IT staffing agency market, as employee redundancy programmes continue to bite.

Introduced in August, the programmes will see a "substantial reduction" to the direct workforce of "many" public sector outfits, where they will stay in force over the coming months.

For the economy, the "big question" is whether the downturn in hiring from the public sector can be offset by its private counterpart, added Bernard Brown, head of business services at KPMG.

But for staff, particularly temps and contractors looking for work, the focus is more likely to be on public sector organisations who have skill shortages from employee redundancies.

So far, needing to fill these skills gaps, seen by Hays IT, has not translated into an overall uplift for temporary and contract IT workers, as demand for their skills continued to fall in August.

According to the latest Report on Jobs index, demand for IT contractors stood at 54.0 last month, down from 56.5 in July and 56.9 in June, although it was higher than in August of last year (-47.8).

Its authors, KPMG and the Recruitment and Employment Confederation, blamed the slowdown in temporary hires on a mixture of "economic uncertainty and public sector cutbacks."

They also recorded fewer permanent placements in August, although the REC's member companies, who include IT agencies, did see evidence of growing skill shortages.

On a permanent basis, generalist IT skills, Business Analysts and .Net were the hardest to source, alongside temporary shortages of IT generalists, Business Analysts and CAD designers.

Across both markets, thought not specific to IT roles, hourly rates for short-term workers notched up in August, representing the eighth monthly report in a row to show pay growth.

Yet the latest increase was the smallest for five months, and downward pressure on rates has been threatening since the onset of the downturn, said Tom Hadley, a director of the REC.

However speaking last week, he told CUK: "Employers know that they have to pay market rates and competitive salaries in order to attract the right calibre of permanent and contract staff."

Asked about the downturn forcing agencies to adopt a lower, flat-rate fee per placement, Mr Hadley said recruiters needed to be able to charge a price that was "commercially viable" for their own individual business.

Reflecting on the new pricing model, he added: "There has inevitably been pressure on [agency] margins during the downturn, but the feedback from many sectors is that this is starting to lessen."

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