Shifting Sands – The Changing Market for IT Contractors

As a freelancer, it’s important to be aware of changes in the employment market; partly because they may affect you more than permanent employees, and partly because you may find yourself better placed to take advantage of positive shifts.

Sand Dunes - iStock_000006792130_Medium

Recent figures in the Tech Cities Job Watch from Experis seem to indicate such a shift taking place at the moment in the IT industry.

The research focuses on key technology disciplines including IT Security, Cloud, Mobile, Big Data and Web Development across ten UK cities.

In the second quarter of 2015, the figures show a 6% drop in the number of permanent roles advertised across all five disciplines; however, at the same time the overall number of contract roles being advertised increased by 3%.

Whilst the decrease in permanent roles may have been influenced by the uncertainty surrounding the General Election, the figures do tend to suggest a shift towards accessing digital skills on a contract basis instead of a permanent one. It seems unlikely that businesses will ever shift to an entirely freelance model; full-time employees, after all, provide a strong foundation and a level of consistency which many businesses still crave.

However, businesses also recognise the need for specialised, valuable skills which are often better supplied by a contractor. Therefore, it seems likely that in the long run we will start to see more hybrid employment models, with a mixture of full-time employees and contractors providing the balance of skills and specialisations that a business needs to thrive.

Interestingly, this trend towards contracting is at its strongest outside of the capital; whilst London shows a fairly stable contractor market, cities like Newcastle-upon-Tyne and Edinburgh showed a particularly strong increase in contractor roles, with the number of advertised contracting positions around double that of the previous quarter.

One factor that may be influencing this trend is, of course, the IT skills shortage; all five disciplines represented in the research are areas which face a shortage of skilled professionals. As a result, those with such coveted skills can afford to pick and choose their roles, and demand a higher recompense for their work as a result.

IT Earnings

This is in turn reflected in research from IT recruiter Randstad Technologies. An independent survey (asking 10,728 British workers about their attitudes to changing jobs) revealed that 22% of tech workers place salary as their top priority, compared to only 18% back in 2012. This indicates a growing level of confidence in workers, particularly in the new generation entering the workforce. Whereas at the end of the recession many were happy to simply have a job at all, tech sector workers are increasingly recognising the scarcity and value of their skills, combined with the growth of the industry, and are therefore pushing harder for an attractive pay package.

Going back to the Experis research, whilst salary changes from one quarter to the next are somewhat marginal, the figures again support a favourable trend for contractors; whilst the average permanent salary across the ten cities studied fell by a little less than 0.5%, the average day rate for contractors increased by 1%. This naturally reflects the fact that contractors are often in a far better position to push for higher rates than a permanent employee might be.

Of course, even with higher rates of pay there is still the need to maximise the efficiency of your business structure; otherwise, you will never be taking home as much of your income as possible. At ICS, our services are tailored towards helping you get the most out of contracting, without you needing to worry about compliance and complex accounts. To help give you an idea of how much you could save with the help of our contractor accountants, take a look at our contractor calculator. If you’d like any further information, contact us today on 0800 195 3750 or chat to us online.