Demand for IT contractors was a hair’s breadth from falling flat in November 2022 – at just 50.3, its lowest index in two years.
The REC, which maintains the index, had to reissue the type of alerts it sent out a month ago, saying that “company/candidate caution is increasing”, but as in October, “this is not not yet a major slowdown”.
The recruiting body’s reassurance follows demand for IT contractors falling in November 2022 for the sixth month in a row, to a level not seen since the first winter of covid.
Neil Carberry of the Recruitment and Employment Confederation (REC) says it’s “really important to remember that this is all happening from a historically high base”.
Moreover, given that it stood at 50.3 last month, demand for IT contractors has increased further, albeit by little – because the market is becoming ‘stable’ at 50.0, warned Carberry in an article.
It has not been since November 2020, following the coronavirus outbreak, that the IT contractor market has recorded a lower score (when it was 49.7).
‘Could be IR35’
While seasonality was and is partly to blame, the same kind of contraction that hit the tech market two years ago is now affecting full-time techs.
“The survey shows vacancies [overall] are still growing – 54.1 – with permanent IT positions the only sector to show a small decline,” REC CEO Mr. Carberry said on Thursday.
He reasoned, “It could be IR35. Could be [Silicon] The valley is sneezing and the area overall catches a bit of a cold.
“Contractors cannot screen non-exterior IR35 roles on major sites”
An independent technical architect, Tim Holmes, has confirmed that IR35 frustrations are typically experienced by tech candidates trying to find work online.
“My pet peeve?” he wrote. “Many job sites like LinkedIn, JobServe, Reed [and others]still do not provide a simple search option to filter out non-external IR35 roles.
But in a specific pocket of IT contracts, IR35 status in November was – for once – lower on the priority list, according to Dr Nick Fine.
“In UR contracts, there’s exceptionally high demand,” he says, “to the point that it’s actually pushing rates back up to pre-pandemic, pre-IR35 levels, [even on] inside the IR35 [roles].”
“Flexibility is as important as compensation”
Writing in the REC jobs report, KPMG partner Claire Warnes said money could actually start to matter less across the board.
“Employers who are able to provide upskilling and re-skilling opportunities to existing workers and candidates, rather than just focusing on base pay, may well benefit the most from this tight job market. ”
REC Deputy Chief Executive Kate Shoesmith agrees.
“The majority of recruiters I speak with take a pragmatic approach to overcoming shortages.
“Supporting clients in creating good working conditions and flexible working is just as important as rewarding candidates in this market,” Ms Shoesmith told ContractorUK.
“Longer Decision Making”
But candidates are facing “longer decision-making times”, according to Mr Carberry, and the likely cause is economic and not seasonal – as seasonality is clearly driving some of the November moderation.
“The market always cools down as Christmas approaches,” confirms Natalie Bowers, an experienced financial services recruiter.
Boss of Bowers Partnership, she continued to ContractorUK: “Many companies are also operating the dreaded furlough in December. I am not aware of any official hiring freeze [in the investment management sector], but we would still expect volumes to be extremely low in December. And as for the rate cuts [for contractors] – no – quite the opposite.
Similar wage premiums were likely offered in November for skilled IT contractors in cybersecurity, development, software, software engineering, and digital/IT/technology, the REC reports, because those seven were scarce on a contract basis.
Candidates for technical positions requiring cybersecurity; Development, software, software engineering, and digital/computing/technology were also rare full-time jobs.
November 2022 further saw a “shortage” of full-time candidates for automation, test, CAD, data engineering, infrastructure, analytics, technical sales and web roles, said REC member companies.
Additional ‘hot’ IT skills now that the UK cold snap has arrived will be leaked this week by Adrian Smith, Senior Operations Manager at Randstad UK, exclusively on ContractorUK.