Contractor demand remains strong as clients increasingly look towards contractors to plug skills gaps, according to the latest UK labour market statistics. IT contractors can look forward to rising cross-sector demand as more industries look to digitise operations to drive efficiency. Meanwhile, the finance sector has fully recovered from its festive blip, and the amount of contract vacancies has risen accordingly. One possible blot on the horizon for contractors could be the upcoming EU referendum, which experts warn could cause uncertainty that results in cancelled or delayed investment decisions and contracts.
In this month’s ContractorCalculator Market Report:
- More contractor clients are recognising the added value contractors deliver through their unique skillsets, shows the Recruitment and Employment Confederation’s (REC) February 2016 JobsOutlook.
- The REC Report on Jobs advises contractors to secure long-term contracts before Brexit fears cause a potential market slow-down during the summer.
- IT contractors can expect to see increasing demand as more traditionally non-digital sectors up their IT investment, reports ‘Tech Nation 2016’ from Tech City and Nesta.
- Oil and gas contractors can help firms adapt to cost-pressures without placing future development at risk, reports ‘A New Reality’, the latest study from DNV GL.
- Morgan McKinley’s London Employment Monitor for February 2016 reveals a strong rebound in terms of finance contractor demand.
Contractors continue to benefit from improving market conditions
Contractor clients continue to capitalise on the buoyant economic climate by hiring contractors as a means of plugging skills gaps and supplementing business growth.
The Recruitment and Employment Confederation’s (REC) February 2016 JobsOutlook shows that 77% of contractor clients consider market conditions to be improving. As a result, 98% of firms plan to either maintain or increase contingent staff headcount over the next three months.
“SMEs and big businesses are both feeling the pressure. The need for people to do the jobs available is driving firms to become more innovative and creative in their recruitment strategies,” highlights REC chief executive Kevin Green.
Far from being seen purely as a means of covering capacity shortages, the value that contractors add through their advanced and diverse skillsets is being increasingly acknowledged by clients, with 90% reporting to engage with contingent staff in order to gain short-term access to strategic skills.
Engineering contractors can expect to see significant demand, with the sector expected to generate the most recruitment challenges. The REC suggests that the candidate shortage within the sector may be indicative of the potential impact of upcoming restrictions on travel and subsistence expenses.
Contractors urged to secure contracts before EU referendum
Contractor demand continued to rise in January, but contractors are being encouraged to secure long-term contracts before Brexit fears cause a potential market slow-down over the summer.
“[One] factor which may create uncertainty in the jobs market is the EU referendum, which now looks likely to happen in June,” warns REC chief executive Kevin Green in the Report on Jobs for January 2016.
Demand for contractors continues to be intensified by worsening skills shortages, with the ongoing pressure on contractor clients to source candidates leading to a further moderate increase in contractor rates. Meanwhile, contractor agency billings slipped to its slowest rate of growth in four months, a strong indicator that contractor supply cannot meet demand.
“Organisations in sectors such as construction and manufacturing are finding it increasingly difficult to recruit due to entrenched skills shortages,” continued Green. However, contractors in these particularly talent-deprived sectors are experiencing contrasting fortunes.
Whilst the blue collar (encompassing manufacturing) sector has shot to the top of the demand league table, demand for construction contractors saw a marginal decline in January, as the talent shortfall continues to stifle projects. This leaves the sector bottom of the table, behind finance, IT and engineering in fourth, fifth and seventh respectively.
IT contractors enjoy increasing demand from non-digital sectors
Contractors in the IT sector look set to benefit from continual rising cross-sector demand as more traditionally non-digital sectors invest in technology to boost efficiency.
Tech City and Nesta’s recent study, Tech Nation 2016, shows that the digital tech economy currently accounts for roughly 1.56m UK jobs. 41% of these exist in non-digital sectors, with that figure expected to continue to rise. As a result, the rate of job creation within the industry is increasing 2.8 times faster than the economy as a whole.
The study highlights that many firms are initially looking overseas (35%) and towards local universities (35%) to attract talent. However, with the shrinking talent pool, caused in part by the rising number of IT professionals opting to contract, contingent staff will remain a popular alternative for firms.
Contractors with app & software development and data management & analytics skills can expect to see particularly significant demand for their services - the two specialisms being the most popular amongst digital tech firms.
“With innovation constantly presenting opportunities within various niche areas, contractors who identify emerging trends within the market and upskill accordingly will find themselves very well placed to take advantage of opportunities,” highlights ContractorCalculator CEO Dave Chaplin.
Oil and gas contractors offer alternative solution to headcount-slashing firms
Oil and gas contractors could provide a win-win solution for operators and services firms who are faced with the dilemma of cutting costs whilst retaining some capabilities for future development.
‘A new reality: the outlook for the oil and gas industry in 2016’ – the latest study from DNV GL – shows that many firms are putting future development at risk by reducing headcounts in response to the immediate pressures caused by sliding oil prices.
“The operators can weather the low oil price storm for some time, but the supply chain will suffer far more, and there is a risk of a permanent loss of capacity in the supply chain if low prices persist,” warns Graham Bennett of DNV GL.
88% of respondents consider cost-reduction to be a high priority in 2016, with 31% reporting that their company is set to prioritise reducing its labour force. Meanwhile, 51% anticipate that overall industry headcounts will decrease over the course of the year.
“Hiring contractors can ensure that oil and gas companies reduce costs by consistently adapting the size of their workforce to align with demand, ensuring no necessary overheads are incurred, whilst also making sure that they have the required skills available in order to progress operations,” highlights ContractorCalculator CEO Dave Chaplin.
Finance contractor demand bounces back in January
Contractor demand in London’s financial sector rebounded strongly at the beginning of the year, following a weak final quarter of 2015 where hiring activity was impacted by volatile markets and redundancies.
Morgan McKinley’s London Employment Monitor for January 2016 shows that demand for finance professionals has risen by 115% compared with December 2015. Year-on-year, demand has remained virtually the same, recording a small 1% decrease.
“Hiring activity fell off a cliff in December, and similar to last year’s month-on-month trend, the bounce back was expected,” notes Morgan McKinley Operations Director Hakan Enver. “However, the strength of this increase does come as somewhat of a surprise.”
Contractors can expect to find themselves in a particularly competitive job market, as the increasingly optimistic outlook appears to be shared by job seekers who are showing a similarly strong appetite for new contracts.
138% more jobseekers were active in the market in January, compared with December, whilst year-on-year figures reveal a 67% increase in available candidates.