The latest REC Report on Jobs, which uses a wide range of recruitment agency data to determine the current health of the jobs market, suggests that the demand for IT contractors has reached its highest level in over 2 years. This demand has risen ever month in 2012 and 2013 so far.
The demand for contract talent appears to be driven by a general recovery in the UK economy, continuing skills shortages in many areas, and the increasing willingness by firms to recruit short-term personnel rather than increasing the permanent headcount.
However, although this is clearly a good signal for the contracting market as a whole, it is interesting to note that average contract rates have not risen in a decade.
In the late 1990s, a reasonably talented developer, or data analyst, with a few years’ experience, could comfortably command rates of £350 per day in Greater London. In the city, rates of up to £600 per day weren’t uncommon, even in areas which weren’t considered ‘specialist’.
However, according to ITJobsWatch, a site which collects data from online job boards, average daily rates for many of the main skill areas remain very similar to those commanded over ten years ago.
The generic ‘developer’ role, for example, which makes up almost 24% of all advertised contract roles, commands £375 per day – the same as an ‘analyst’. An agile developer might be looking at a daily rate of £425, and project managers £432.
The ITJobsWatch data also shows healthy increases in demand (and rates) over the past 12 months. For example, the average rate for a contractor with JAVA skills has risen by almost 6%, and UNIX rates are up by almost 7%.
If you remember the old ‘Jobstats’ site, which displayed average rate data from around 1999 onwards, the bottom graph on this archived page shows how the median contract rate reported on job sites peaked at around £40 per hour at the turn of the century, before declining, and eventually returning to the same level in around 2010. Rates have not increased significantly since then.
Kevin Green, the chief executive of REC, said that the UK jobs market had fared far better than our European neighbours, but said that the Government needs to do more to “address the growing skills gap”.
“Roles in engineering and IT are in ever increasing demand as recruiters struggle to source the talent that businesses need to succeed. However more roles, such as sales and digital marketing, have been added to this growing list in the last couple of months and show no signs of disappearing.”
So, while we should all welcome the positive growth in demand for contractors, it would seem that the economic downturn continues to keep a lid on rate inflation. The massive growth in web-based outsourcing – mainly to low-wage economies, has also contributed to a downward effect on contractor rates.
IT contracting remains a lucrative career move for most IT professionals, but to achieve the big rates achievable by many a decade ago, you need to develop specialist skills. Again, according to the ITJobsWatch data, contractors with ‘SuccessFactors’, ‘SAP HCM’ and ‘Aligne’ skills, for example, can enjoy rates of over £700 per day.