Why renewal is IT contractors' top priority

It may not faze so-called 'career' freelancers, but the ubiquitous process of contract renewal is being underlined in IT contractors' diaries, revealing the same ends but different means.

Those in the private sector, where some rates have cooled and contractor availability is historically high, will mark their end-date with 'extend,' as almost all want to stay in the best-paying market.

Those in the state sector, where IT projects are being withdrawn, might pen the same but, for many, only because renewing buys them time to 'go private', avoid a pay stop and leave public work entirely.

Such is the consensus verdict from four leading IT recruitment agencies, which yesterday told CUK how contractors, in public and private roles, are pinning their hopes around contract renewal.

However today's focus on the process started in the public sector in the past two quarters, when IT contractors were handed considerably fewer renewals with much shorter extensions.

Measured by IT staffing group Parity, the average contract extension period fell from organisations having to keep within restricted spending limits, as ordered by central government.

Although it does not fall to a recruitment company to decide the length of a contract extension, some contractors suspected that their agents had a hand in the unusually short duration.

"I don't think agents are calling the shots here; it's simply that IT projects in the public sector are in tidy-up mode, not business as usual," said Jeff Brooks, IT & Comms chairman of the REC.

"So contractors will hear 'I know you were meant to be here for 8 more months; but the project's not going to run for that long; we just need you for 3 months to wind it down'".

Agents at Prime Sourcing, where Brooks is a partner, say the sheer scale of the public sector's IT project "clearout" also deems many contract extensions unrealistic beyond a few months.

"Public sector is letting its IT contractors go, and not kicking off new projects that the contractor would have normally moved on to," the agency said.

"Until now, contractors might have got a year at renewal because by that time the public sector client would switch them to another project; that's no longer happening."

As a result, public contractors offered a 3-month extension will probably accept, and use the time to "get out of the state sector, or somewhere else in the sector, or into the private sector."

Currently placing IT staff in both sectors, Outsource UK hinted renewal prospects remained solid for contractors but, cautioning against rate rises, told contractors to "be realistic about budgets," despite positive fluctuations for some skills in recent months.

The recruitment firm's managing director Paul Jameson said: "Probably 90 per cent - possibly more – of our contractors will get extended at least once.

"Some...[also] network within the client [organisation] to find further opportunities that may become available to them at the end of their assignment."

At another IT staffing firm, Arrows Group, the proportion of niche IT workers with extensions is lower, between 60% and 70%, said its managing director Adrian Treacy.

But pointing to its total spread of IT placements, the firm said it was mainly still "good news" for specialist IT workers who push for contract extensions.

This should reassure the swathes of IT contractors who are now expected to negotiate an extension, having been hired by the private sector in the first half of this year.

"Lots of them will push for renewal," Mr Brooks predicted. "Many are happy to stay in a role in the private sector for some time, and some may want to prove they can settle not just land."

Meanwhile, Hays IT said large numbers of jobless IT staff on the market is reducing the potential for rate increases, convincing more autonomous contractors to stay put.

Summing up the agency consensus, contracts manager for Hays IT Liam Doyle, who has a London focus, said: "In the current market the main priority for IT contractors is to secure a contract extension".

Editor's Note - CUK will soon explore the client's and agency's role in IT Contract Renewal - What to expect of agents, and will subsequently publish When IT contractors push for a rate rise.

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