There is good news out there for contractors. Yes, the doom and gloom merchants are out in force, with media outlets quick to communicate bad news; but dig deeper behind the headlines and there are major opportunities for contractors.
In this month’s ContractorCalculator Market Report:
- Survey reveals heightened contractor expectations in response to the economic downturn
- The Monster Employment Index continues its downward spiral, only one of many negative employment indicators painting a bleak picture
- New survey from the National Computing Centre highlights the challenges faced by the IT sector in 2009
- The Insolvency Service reports a massive increase in corporate insolvencies in the last quarter of 2008, thought to be directly as a result of the recession
- IT contractors could benefit from proposed changes to public sector IT procurement.
Contractors upbeat despite downturn
A surprise 40% of contractors surveyed by accountancy based service solutions provider JSA are expecting to earn more in 2009 than in 2008. This is despite the impact of the recession and the contractor culls in the financial service sector. The survey goes on to reveal that only 44.3% of those contractors asked think that the credit crunch has had any serious effect on their general financial situation.
With all other employment indicators painting a very black picture, this surprise result may reflect the diverse nature of those contractors questioned, with representatives from the IT, teaching, medical, social care, security, engineering and administration and management fields included in the survey.
IT, construction and engineering contractors continue to take a hammering. The Recruitment and Employment Confederation (REC) and KPMG’s Report on Jobs shows the only sectors with healthy growth are medical and social care. And according to interim management recruiter Russam GMS, although overall interim management volumes might be down 11%, average rates are up to £612 from £603 and contractors in this sector are positive about their prospects.
Jobs market woe deepens
Negative sentiment across the board contradicts contractors’ apparent optimism, with a number of major employment indicators showing a deeply depressed labour market:
- The Monster Employment Index dropped by 11 points to a-20 month low, with the bottom falling out of the financial sector
- SSL and Computer Weekly reported 23.3% fewer IT and telecoms jobs advertised in the last quarter of 2008
- The Recruitment and Employment Confederation (REC) and KPMG’s Report on Jobs confirm bad employment news nearly every sector of the economy.
The list of sectors affected makes depressing reading, with most core contractor disciplines appearing to be badly affected, and showing significantly reduced demand for employees and contractors.
However, IT contractors can take heart from the SSL and Computer Weekly survey, which shows that some skills are still in short supply and contracts in these areas are on the increase. According to Michael Bennett, of specialist IT recruiters Rethink Recruitment: “We’re getting a lot of demand for contractors. Employers are just not advertising for them anymore, because they know they can get people through word of mouth or recruitment companies.”
IT resilient in downturn, but still facing skills gap
We're getting a lot of demand for contractors. Employers are just not advertising for them anymore, because they know they can get people through word of mouth or recruitment companies
Michael Bennett, Rethink Recruitment
Further good news for IT contractors is that new research by the National Computing Centre (NCC) shows:
- 33.7% of organisations have trouble recruiting the IT skills they need
- A third of those surveyed have problems recruiting and retaining workers
- 80% of IT services sector suppliers plan on increasing their headcount in the next year, with 62% of public sector respondents claiming the same
- Increasing rates of pay
- Demand for some specialisations, such as developers, is set for double-digit growth.
So, the news is positive for IT contractors who have the right skill set and who can identify those clients who will be investing in IT as a strategy to combat the downturn.
Insolvencies on the increase
Recent figures released by the Insolvency Service show the total number of company insolvencies in the last quarter of 2008 at 4,607, an increase of 51.6% on the same period in 2007 and an 11% increase on the previous quarter.
Many companies seek bankruptcy protection not because their own business is failing but because their clients can’t pay them, a scenario that many contractors will find themselves in if strict credit control checks are not implemented.
Open source hailed as solution to failing public sector IT
Contractors in the IT sector could stand to gain if public sector IT procurement is radically overhauled, as proposed in a new study released this month. Those specialising in open source development look set to come out on top.
In the report published by the Conservative Party, Dr Mark Thompson of Cambridge University’s Judge Business School recommends sweeping changes to public sector IT procurement. These should save money, time and improve project performance.
The report highlights how open source software has been used by national and state governments in countries such as Japan and Spain to significantly reduce costs and increase performance and service delivery.
If adopted by an incoming Tory government, the recommendations would open up major contracts to smaller businesses, including contractors.
Published: Wednesday, February 11, 2009
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