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ContractorCalculator Market Report March 2015

Contractor demand has softened in some sectors and geographical regions, but in the core disciplines of IT, engineering and oil and gas specialist skills remain very much in demand. Despite the plummeting oil price and the threat of cancelled investment in the North Sea, skills shortages remain a concern for clients in the sector. Canny oil and gas contractors can turn the market turbulence to their advantage by targeting those clients who remain confident and are sustaining investment. Across the other disciplines, growth has been flat with the exception of IT and engineering. The evidence suggests this is seasonal and not indicative of any downwards trend in contractor demand.

In this month’s ContractorCalculator Market Report:

  • The UK’s contract market is stabilising, but core contracting disciplines such as IT and engineering are demand hotspots, says the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
  • Contractors in Scotland might want to consider contract opportunities across the wider UK, as January’s Bank of Scotland Report on Jobs shows a softening of the country’s contracting sector
  • 92% of contractors earn the same as or more than their permanent counterparts, highlights February’s Recruitment and Employment Confederation (REC) JobsOutlook
  • Skills shortages remain of prime concern to oil and gas sector clients, with subsea, petroleum engineering and LNG being most in demand, says the sixth Hays Oil and Gas Salary Guide
  • A report by consultants DNV GL suggests that contractors with the right skills can turn the slump in oil prices to their advantage by focusing on those clients who plan to maintain investment.

Contract market stabilises, although demand for specialised skills is sustained

Contractors are experiencing a stabilisation of the wider contract market, with demand in specialist disciplines such as IT & computing and engineering remaining strong. Skills shortages persist in these areas, causing hotspots of increased demand and rates.

January 2015’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs also highlights a backdrop of slowing agency billings growth that, when coupled with a slowdown in falling contractor candidate availability and modest rate rises, suggests a cooling market.

IT & computing and engineering were in fourth and fifth place respectively in the demand league tables. Accounting/financial, construction and executive/professional remained in sixth, eighth and ninth place respectively, unchanged from December 2014’s Report on Jobs.

Scotland’s contract market softens, as the UK market offers better prospects

Scotland’s contract market softened during January 2015, in marked contrast to much of 2014, when Scotland’s contracting sector consistently outperformed most of the rest of the UK. This means that for the first time contractors based in Scotland may wish to consider targeting contracts elsewhere in the UK.

Agency billings also fell for the first time since 2008, according to the latest Bank of Scotland Report on Jobs for January 2015, ending a period of growth lasting two-and-a-half-years.

“Scotland’s jobs market continued to improve in January but showed signs of cooling,” highlights Bank of Scotland chief economist Donald MacRae. “The number of people appointed to permanent jobs rose but temporary appointments fell.”

MacRae adds: “This Report on Jobs suggests the Scottish economy continues to grow at the start of 2015 but at a slower rate than the end of last year.”

92% of contractors are earning the same as or more than employees

The number of contractors and temporary workers earning the same as or more than their permanent employee counterparts has increased to 92%. The number of contingent workers who earn more than permies has risen from only 19% in March 2014 to 36% in January 2015.

This is according to February 2015’s Recruitment and Employment Confederation (REC) JobsOutlook, which also highlights that 75% of clients “cited ‘short-term access to key strategic skills’ as the dominant reason for use of agency workers”.

“The option of taking on temporary work is becoming more attractive and this is indicative of a labour market where the need for talent is acute and skilled workers are in increasingly short supply,” explains REC chief executive Kevin Green.

“Ninety-three per cent of employers tell us that they have limited capacity to take on additional work, and many businesses are prepared to pay more for temporary workers in order to boost productivity and capitalise on the improving economic climate.”

Oil and gas opportunities strong in “subsea, petroleum engineering and…LNG”

Oil and gas contractors with subsea, petroleum engineering and liquefied natural gas (LNG) skills continue to be in high demand, despite the plummeting oil price. And the uncertainties created by oil price fluctuations mean some clients will choose contractors rather than permanent hires to manage this risk.

This is according to the sixth annual Hays Oil and Gas Salary Guide, which shows that skills shortages remain the greatest concern for clients.

“Teams managing day-to-day operations still require the resources necessary to complete projects on time and within budget,” explains Hays Oil & Gas managing director John Faraguna. “At the other end of the spectrum, smaller businesses are responding to recent changes by focussing on interim hiring, shifting from multi-year contracts to short-term specialist assignments.”

Oil and gas contractors can benefit from the impact of falling oil prices

Oil and gas contractors, including those with broader IT and engineering skills, can turn the current oil industry downturn to their advantage, suggests a report by consultants DNV GL, A Balancing Act: The Outlook for the Oil and Gas Industry in 2015.

The report highlights that many oil and gas sector clients remain optimistic and plan to sustain investment despite the downturn. Contractors can remain in contract through carefully targeting their clients and ensuring their skills match the changing needs of the industry.

“Tight schedules, high activity and complex projects have driven costs up over the last few years,” notes DNV GL Oil & Gas CEO Elisabeth Tørstad, “but it is interesting to see that the most confident industry players are forging a different path to their less confident peers. They are showing counter-cyclical behaviour by investing during the downturn, which is positive for the long-term health of the industry.”

Encouragingly for contractors, the report says: “The reality is that, while many of the job reductions will be focused on support staff, many specialist technical roles will remain challenging to fill.

“And, while short-term skills pressures may have abated for many, the problem will persist in the long term, and even worsen if the industry does not learn the lessons of the past, and fails to continue to proactively maintain its roster of skills.”

Published: Tuesday, 3 March 2015

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