SG Accounting

The UK's leading contractor site. 200,000 average monthly visitors.

ContractorCalculator Market Report September 2014

Contracting is increasingly turning into a candidate-led market as a result of sharp increases in demand alongside falling contractor availability. The result has also been to drive up rates and provide opportunities for rate increases at the contract renewal stage. Forecasts from both the Recruitment and Employment Confederation (REC) and recruiter Robert Half suggest that demand looks set to increase further during 2014 and beyond, leading to a contract boom.

In this month’s ContractorCalculator Market Report:

  • Contractors coming to the end of their contracts with a renewal in store are in a strong position to ask for a rate rise, according to the latest Recruitment and Employment Confederation (REC)/KPMG) Report on Jobs
  • Morgan McKinley’s most recent London Employment Monitor shows strong demand for IT contractors who have mobile and digital technology, user experience, data management and IT security skills
  • Scotland’s oil and gas contract market is regaining momentum after a lull in recent months, but the financial sector recovery may be slowing down, shows the Bank of Scotland Report on Jobs
  • Contractors are now hired mainly so clients can access strategic skills on a short-term basis, highlights the Recruitment and Employment Confederation (REC) JobsOutlook for August 2014
  • A hiring boom for financial, accounting and IT contractors is forecast for the second half of 2014, says recruiter Robert Half in a survey of leading contractor clients.

Falling contractor availability and rising demand could drive renewal rate rises

With contractor availability falling at its fastest rate since March 1998, a seven month high in agency billings plus sharp increases in rates, contractors facing contract renewals are in a strong position to be asking for rate rises

July 2014’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs also shows that demand continues to grow across the core contracting disciplines of construction, engineering, IT, accounting and finance.

“Skills shortages in the key contracting disciplines have brought about a candidate-led market,” says ContractorCalculator CEO Dave Chaplin. “With rates rising across the board, that means the time is ripe for those about to renew their contracts to be asking for rate rises.”

Although it is good news for contractors, candidate shortages may have a less positive impact on the UK’s ongoing recovery. REC CEO Kevin Green explains: “The UK’s post-recession problem is skill and talent shortages. The economy is going to be constrained by this ongoing talent crisis if employers keep doing business as usual.”

IT, HR and accounting and finance contractors lead City contract growth

IT, human resources (HR) and accounting and finance contractors led contract growth in London’s financial sector during July 2014. This is according to the latest Morgan McKinley London Employment Monitor, which also shows that candidate availability grew strongly.

“Our latest data indicates that City hiring remains exceptionally buoyant,” notes Hakan Enver, Morgan McKinley Financial Services operations director. “In terms of the functions driving jobs growth, in July we saw a huge amount of demand within theHR, IT and accounting and finance arenas.”

IT, on the contract side especially, is still buoyant

Hakan Enver, Morgan McKinley Financial Services

Enver singles out IT as performing particularly well, and highlights those skills that are in particular demand: “IT, on the contract side especially, is still buoyant. Organisational change and the need to address compliance and regulatory issues drove further demand, with a focus on mobile and digital technologies, user experience, data management, analytics and IT security.”

Scotland’s contract market offers opportunities to contractors elsewhere in the UK

A combination of falling contractor availability coupled with increasing demand means Scotland’s contract market continues to offer opportunities to contractors from elsewhere in the UK who are prepared to relocate.

July’s Bank of Scotland Report on Jobs also shows sharp increases in demand in the core contracting sectors of engineering and construction and IT and computing. However, the accounting and finance and interim management sectors have performed less well. This could signify a slow-down of the recovery of Scotland’s financial sector.

“Demand for both permanent and temporary staff was expressed by a surge in vacancies accompanied by a drop in the number of candidates available,” notes Bank of Scotland chief economist Donald MacRae.

Regionally, the contact market performed strongly across the whole of Scotland. Aberdeen experienced both the greatest increase in contractor agency billings alongside the sharpest drop in contractor availability. This could indicate a period of accelerated hiring in the oil and gas sector, which had started to stagnate in recent months.

Contractors are increasingly hired for their strategic skills, say clients

Contractors are principally hired to enable clients to have short-term access to strategic skills, and contractor hiring looks set to remain buoyant in both the short and medium-term.

According to August 2014’s Recruitment and Employment Confederation (REC) JobsOutlook , 82% of clients now use contractors “to provide short-term access to key strategic skills”, which the REC highlights is currently “the dominant reason for accessing” contractors.

“The latest JobsOutlook highlights once again the value of the contracting sector to UK plc,” notes ContractorCalculator CEO Dave Chaplin. “Contractors are not disguised employees, but a valuable resource of strategic skills that are called upon on an as needed basis by clients who don’t need or can’t afford these skills full-time.”

Clients have strong forward hiring plans for contractors, with 43% planning to increase contractor headcounts over the next three months, and 44% intending to add to their contracting workforces in the next 4-12 months.

Financial, accounting and IT contractors look set to benefit from a hiring boom

Contractors with financial accounting and IT skills are facing a hiring boom in the second half of 2014, as 44% of contractor clients are predicting an increase in their contract and permanent headcounts.

The latest professional index from Robert Half UK highlights that skilled professionals are in increasingly short supply, particularly those with niche skills. Half of the clients surveyed by the recruiter said that finding candidates with the right skills is “very challenging”.

Although good news for contractors, these skills shortages are less good for the economy. Sheridan explains: “Skills shortages across the UK economy are becoming a major issue, with this deficit putting businesses at increasing risk.

“Our figures show that financial services and finance and accounting, in particular, are current and future growth areas, with professionals being highly sought after and commanding premium remuneration.”

Published: 02 September 2014

© 2021 All rights reserved. Reproduction in whole or in part without permission is prohibited. Please see our copyright notice.

IR35 Shield for Business