Contracting prospects look largely positive as the end of the year approaches. This month’s selection of labour market and economic data highlights a wide-ranging and well-rounded upswing in contractor demand. Increasingly buoyant market conditions mean many clients are looking to add to their contingent workforce, whilst the ongoing skills shortages ensure contractors who apply themselves will not be short of working options. Meanwhile, IT and finance contractors in particular are enjoying a sharp rise in demand for their services.
In this month’s ContractorCalculator Market Report:
- Contractors are high priority for clients looking to capitalise on improved confidence in the economy, according to the Recruitment and Employment Confederation (REC) JobsOutlook for November 2015.
- A contract-rich market is emerging as a result of severe and ongoing skills shortages, says the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs.
- The latest Tech Cities Job Watch by Experis Manpower Group shows a broad-based upswing in terms of demand for IT contractors.
- Contractors in London’s IT and finance sectors look set to reap the rewards of an increasingly buoyant market, reports Morgan McKinley’s London Employment Monitor for October 2015.
- The latest Professional Recruitment Trends survey from the Association of Professional Staffing Companies’ (APSCo) sees the finance sector driving overall contractor demand.
Contractor demand boosted by buoyant market conditions
Contractors can look forward to a surge in new business as clients attempt to capitalise on improving UK market conditions by growing their own businesses. This is according to the Recruitment and Employment Confederation’s (REC) JobsOutlook for November 2015 which reports a sustained wave of optimism amongst businesses.
High levels of optimism looks set to result in increased contractor demand, with 43% of clients surveyed expecting to increase their contingent workforce headcount over the next three months, and 56% are planning to maintain numbers. Meanwhile, medium-term prospects are almost identical.
The rise in demand also plays into the hands of contractors in a fiscal sense, as the report highlights that almost half of businesses have introduced rate increases over the past 12 months in order to stay competitive.
“Skilled people are at a premium and organisations across the economy are having to pay more to attract and retain staff,” highlights REC chief executive Kevin Green.
Engineering and construction contractors can expect exceptional demand for their services, as they made up two of the top three spots when contractor clients were asked where they most expected to see a shortfall in candidate supply.
“The statistics show that the contingent workforce can play a pivotal role in the continued growth of the economy,” notes ContractorCalculator CEO Dave Chaplin. “As long as businesses continue to see potential for further growth, contractors should not find themselves short on new contract opportunities.”
Contractor skills gap worsens, resulting in contract-rich market
Contractor agency billings accelerated at a marked rate during October 2015, alongside the continued rise in demand, leaving candidate supply still severely short. This has resulted in a contract-rich market in certain sectors.
The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs for October 2015 identifies the construction sector as one where contractors can expect substantial demand for their services.
“It is clear the industry is suffering from a chronic skills shortage along its entire supply chain, with recruiters struggling to meet demand for roles ranging from architects to construction workers,” explains Bernard Brown, Partner at KPMG.
Although contractor agency billings grew to the strongest rate seen since July 2015, a similarly sharp increase was recorded in terms of contractor vacancies, whilst candidate availability continued to fall.
When asked if hourly pay rates were higher, lower or the same as the previous month, contractor clients reported a net increase of +17, suggesting that the increasing skills gap is driving up contracting income.
“This month’s Report on Jobs shows that more fresh talent is needed in the contracting sector, and those not currently in work can re-enter the market with confidence of sourcing contracts,” highlights Chaplin.
IT contractor demand growth outplacing that of permanent hires
IT contractors are benefitting from an upswing in demand, with contractor agency billings growth in the sector found to be outperforming that of permanent employees.
The Tech Cities Job Watch for Q3 2015 by Experis Manpower Group also shows that, whilst London remains the dominant hub for IT contracts, other major cities are making strides to increase their contingent headcounts, making contracting outside of the capital an increasingly feasible option for IT professionals.
Tech cities outside of the capital enjoyed a 10% increase in contractor demand, compared to a 6% rise in London. Notably, Newcastle increased its IT contractor headcount by 225%, while Manchester reported a 30% increase. Meanwhile, demand for permanent hires fell by 4%, with London experiencing a 7% decrease.
“Businesses are always on the look-out for short-term yet high quality solutions when it comes to this sector,” Chaplin notes. “As a result, IT contractors should be able to look forward to an increasingly geographically broad-based demand for their services.”
The report attributes part of the migration of talent to improved cross country transport links, as well as an increase in more widespread IT contract opportunities resulting from more companies basing their core functions in other cities.
IT and finance contractor demand increases during October 2015
Contractors in the IT and finance sectors look set to benefit from sustained demand for their services. This comes after opportunities for professionals rebounded in October, following a slight dip in fortunes during September.
This is according to Morgan McKinley’s London Employment Monitor for October 2015, which reveals that demand for professionals in the capital has jumped up by 7%, compared with September.
Year-on-year figures paint an even more positive picture, with a 28% margin of growth in terms of demand, pointing towards an increasingly vibrant market.
This rise in vacancies hasn’t gone unnoticed though, as the amount of professionals seeking new work has risen by 61% in the same timeframe, suggesting that contractors in search of new opportunities may need to act fast.
“The results show a return to the positive trend seen in the first half of the year, after three months of decreases in new jobs and two months of declining job seeker numbers,” reads the report, which attributes much of the reduction in demand throughout August and September to the summer holiday season.
Finance sector the driving force behind climbing contractor demand
The buoyant finance sector is largely to thank for increasing contractor demand across the UK, after contract vacancies with the sector have soared over the past year.
The Association of Professional Staffing Companies’ (APSCo) Professional Recruitment Trends survey for November 2015 shows that whilst overall contractor demand is up by 2% year-on-year, vacancies for contingent staff in the finance sector are up by 34% across the UK.
However, it is apparent that there is a shortage of sufficient candidates within the sector, as placements are failing to match up to the same dizzy heights.
Temporary placements in the finance sector have increased a healthy amount year-on-year, by 6.7%. However, this falls behind the trend of growth seen in both the IT (8.1%) and engineering (6.9%) sectors, despite the latter two witnessing marginal declines in terms of contractor demand.
The rise in demand has also resulted in significantly improved income for finance contractors, with professionals in the sector enjoying a 10.8% rise in rates, on average. Engineering (4%) and IT contractors (2%) are also financially better off than at this point last year.
“Contract vacancies are consistently strong, despite a continual increase in permanent roles, as organisations continue to capitalise on the benefits of a flexible workforce,” highlights APSCo Chief Executive Ann Swain. “The reality is that the professional flexible workforce is now ‘the new normal’ – a trend that we predict will continue into 2016.”