IT contractor market preview 2023: skills, rates, rivals and kissing frogs

Which IT contractors will be very in-demand in 2023?

Cloud Data Engineers, Visualisation Developers, Data Analysts, and all things Azure.

For these four, I’m already seeing rate inflation, says financial services tech recruiter Natalie Bowers, who predicts the quartet to be ‘hot’ for contractors in 2023.

And while not all IT contractors can ‘name their price,’ the techies setting their rates in these sought-after niches are “heavily influencing” the market rate overall. The co-founder of Bowers Partnership also said clients who want them are having to stump up, or go without.

Niche IT skills like these will be the only tech skills to grow in 2023, then?

Highly unlikely. If you look at our December 2nd-publihsed tracker of the labour market, says the Recruitment & Employment Confederation, you’ll see that demand for IT staff actually saw a 2.2% uplift, specifically for job vacancy postings for Programmers and Software Developers (from mid-November to the end of November 2022).

And that data chimes with what we’re regularly hearing from REC member agencies -- that demand remains “sky high” for candidates with the right skills, notably in the professional and technical sectors, says the REC’s deputy-CEO Kate Shoesmith.

Will the hiring market therefore be plain-sailing for IT contractors in 2023?

Wishful thinking. Average turnaround time for contract placements has increased by three days in the past month alone, IT recruitment agency VIQU cautioned last night.

The longer turnaround time is seemingly because clients are choosing to interview more people while the economy is uncertain, which is increasing their desire to find the right person, says the agency’s Matt Collingwood.

Plus, there’s a sense clients are turning more candidates down than usual, he adds, and this may be because they are aware they have more options – candidate-wise -- than they have had in the last two years.

Similarly, the number of CVs received by the agency in the last three months is up 22% compared to the previous three months, says Collingwood, VIQU’s managing director. So the market is becoming “tighter for IT contractors.”

When did tightness in the IT contracts market begin?

The temporary labour market in IT/Computing “turned” at the beginning of September 2022 and today, we’re no longer in that ‘job-rich’ environment, says Bowers Partnership, which specialises in placing tech freelancers in the investment management sector.

But the agency says it’s still a “candidate-short market” which means little to no liquidity and so “contractors looking for their next gig will often find that they’re in a one-horse race.”

At the REC, Shoesmith says that it’s true that employers now lack confidence in the overall economic conditions, but it’s also true that they are definitely still looking to hire.

The confederation’s September 2022 data in its Report on Jobs appears to corroborate. Demand for IT skills on a temporary basis grew then, albeit at a slower rate – a slowdown then-seen for four consecutive months.

Are IT contractors (and agents) already reacting to the slowdown?

It seems so. Significantly, contractors are being "far more proactive with extensions."

Whereas normally it’s the recruiter chasing the contractor and client, earlier this week, a VIQU contractor rang one of the company’s agents wanting to discuss extending, even though the contractor still had some 3.5 months left to go on their contract!

With two-and-half-decades of hiring IT contractors under his belt, Collingwood says he’s definitely now noticing an increase in the number of contractors saying they’re open to permanent opportunities.

He reflected: “This is likely due to them wanting some job security in such uncertain times.”

Echoing what the REC spoke of in September – that the uncertainty was making hirers freeze recruitment, VIQU’s boss says: “I’m already seeing hiring being put on hold. There’s been a rise in the number of recruiters labelling themselves ‘looking for work’ on LinkedIn. We saw the same in the first couple of months of the pandemic.”

Should IT contractors bother with LinkedIn in 2023?

In line with the CV & Interview Advisors today describing the professional networking website as the “most important” marketing tool for contractors (alongside the trusty CV), Lily Veale of software company Loopin says that new stats show that six people get hired through LinkedIn every minute. 
 
“And an advert on LinkedIn can reach 14.6% of the world’s population,” Veale wrote online. “So, next time you're wondering if you should post, comment, engage or network [on LinkedIn]... the answer is YES. You should!”

What about remote working in 2023 if I’m an IT contractor?

It looks like there will be less home-based contracts in 2023 than you might have thought only a month or two ago. And certainly less than you would have thought coming out of covid!

Agency director Ms Bowers says there is a still a significant amount of “WFH” contracts up for grabs, partly meaning ‘missing that washing machine delivery or the boiler repair van should no longer be a thing, as the cold snap arrives,’ she mused.

But at staffing firm VIQU, where IT contractors are placed in sectors other than just financial services, 100% remote contracts are becoming harder to come by.

In fact, there has been a “big shift” from fully remote opportunities to ‘hybrid’ in the last six-to-eight weeks.

Furthermore according to Collingwood: “I believe this is because of a drop in opportunities due to the economic uncertainty, and the time of year, just as there is a greater supply of contractors.”

How might IT contractor assignments change in 2023, because of IR35, perhaps?

Part of the “pragmatic approach” that Shoesmith says REC member agencies are taking towards recruitment means accepting where we are, currently, on the off-payroll rules.

Or as the confederations’ deputy CEO puts it: “We are way past the point of bemoaning labour and skills shortages, or pinning our hopes on a reversal in IR35 reforms.”

But Bowers Partnership says “there’s still too much inside IR35, sadly, for many.”

The niche recruiter added: “The outside IR35 roles do exist, but they are mainly on a client-by-client basis. The smaller end-clients we hire for are adopting a pragmatic approach. That’s at odds with many of their larger counterparts, who aren’t.”

What about contractor CVs in 2023?

Today on ContractorUK, work-winning expert Matt Craven says a contractor who turned down his CV help gave off a few ‘inside IR35’ vibes, despite ultimately wanting ‘outside IR35’ opportunities.

But recruiter Jeanette Robinson says some candidates need to get the very basics right with CVs first – assuming they want to hear back about the opportunity.

“It may sound overly obvious but judging by recent CV's I've received, it appears not to be. [And that is this --] when applying for [work], you need to put your email address and telephone number on your CV, otherwise all your efforts will be wasted”.

The owner of Cavill Robinson Financial Recruitment, she continued: “And [those details] also need to be in a place which is obvious, rather than hidden somewhere at the bottom of the CV where recruiters have to hunt around for them.”

What about IT contractors’ rivals in 2023?

According to VIQU, competitors are already advancing. “We’ve seen an increase in the number of Europeans with fluent English looking to contract remotely in the UK,” says Collingwood.

“They don’t want to move to the UK, so they are asking for a lower rate in order to make themselves attractive. This will have a negative impact on UK-based contractors as we move into New Year of 2023.”

Will the government step in on the recruitment sector in 2023?

The REC’s Kate Shoesmith is hoping policymakers will intervene, albeit in one specific area.

“We will not give up on the fight to unlock the Apprenticeship Levy funds,” she says. “That’s the quickest way government can provide training pathways for the many quality jobs that are available right now and going unfilled.”

Will it be down to candidates and brands to step in, and step up, to improve the hiring process in 2023?

Dr Nick Fine is a former IT contractor who believes contractors and clients must indeed do better in 2023.

He says the common bugbear for candidates of numerous interviews and complex or extended application processes have evolved as “filtering systems” (which weed out the unsuitable), because candidates aren't being truthful on their CVs.

“Both parties need to reconsider their behaviour,” says Dr Fine, an expert in UX and UR. “Candidates and hiring brands both need more honesty and transparency.

“Candidates need to represent themselves more realistically and brands need to provide a more open assessment of their current capability and ability to develop. Being more open and honest on both sides of that table will mean less kissing of frogs, and better, faster, corporate matchmaking.”