There are plenty of good reasons to become an IT contractor, a higher salary, the flexibility of contract work and the independence that goes with it to name just a few. But contractors have had it tougher than most over the past year. Specialist knowledge mean high rates of pay, which means mean contractors were an easy target for job cuts. For many, the credit crunch has meant a very uncertain and worrying time, but no one knows this as well as IT contractors.

So what is the current state of play in the IT contractor recruitment market?

IT Contractor Pay Rates

During an economic downturn it is assumed that businesses increase contract positions in an effort to deploy a more flexible workforce. In reality contract vs. perm positions have remained constant since July ‘08 with the ratio of permanent to contract jobs remaining at 4:1.

Employers are able to take their pick when it comes to new recruits during a recession, they are also taking a ruthless approach to pay. Over the past year we have witnessed major corporations such as BT , Shell, BP and Lloyds make reductions in IT contractors’ pay rates.

However BP have recently announced that they are to retract their intention to reduce the rates of IT contractors’ pay by 10% until they have evaluated the situation further.

Although these lower rates still seem to be the norm for the majority of contracts out there, it seems companies are willing to pay more for certain skill sets. An article published on eFinancialCareers reported an increase in rates for contractors with banking and finance skills. However the article also stresses that the rates remain much lower than a couple of years ago.

Length of contracts

We also spoke to Matt Miller, Director of 7C Alliance – an independent coaching and marketing service for IT contractors. Being in the thick of the IT contractor job market, he informed us that although the length of contracts still vary, the notice period is significantly shorter, regardless of the contract length. This quick get-out clause mirrors employers’ merciless attitudes to salary in the current climate.

So where does that put you as a contractor in terms of negotiating not only a contract in the first place but that all-important pay packet?

The Agency Workers Directive (AWD)

In a speech to union workers last week, Gordon Brown pledged to introduce new legislation for temporary staff before 2011. This will give them the same rights as permanent staff. The Agency Workers Directive (AWD) is designed to increase job security for those in the contractor market. On the surface this looks like welcome news for contract based employees but this initiative has not been devoid of opposition.

The unease surrounding the topic seems to stem from the speed at which the government is proposing to implement such a law and that any potential problems may have been overlooked. It is also unclear exactly how this new act would protect workers given that the finer details do not seem to have been finalised.

There are concerns this could be a further knock to the already battered economy should companies have to dish out even more redundancy pay. The Association of Recruitment Consultancies has claimed this could cost the country another £2 billion and will discourage firms from taking on new staff at a time when the IT recruitment market could do with a confidence boost.

Contractorcalculator.co.uk called attention to concerns over the directive leading to a decrease in contracts and a revival of the offshoring trend as smaller agencies and businesses struggle to cope with the costs.

Issues and considerations for the future of contracting

The market remains unpredictable and is still changing. Although there are pros and cons to contracting, is the fight for contract staff in the current climate really worth it?

Matt Miller feels these market conditions will play a pivotal role in shaping the IT contractor job market of the future.

“The current market will sort itself into those who truly want to contract and those that would perhaps be better suited to a permanent position. Being a contractor is not easy and the future of contracting will see the birth of the ‘Super-Contractor’.”

There is now much more of an emphasis on soft skills as well as technical skills in order to secure the next contract. Miller thus described the Super-Contractor as a well-rounded techie. “Contractors, now – and more than ever before, must not only be able to ‘walk the walk’ but also ‘talk the talk’ in order to land their next project.”

He had this advice for freelancers applying for contract positions:

“In the past people relied much more heavily on agencies to find a job whereas in the current market it is less about automation and more about interaction. Savvy contractors will learn to write better, use discussion boards and network to sell their skills and secure a job.”

Back in June of this year (2009), the Centre for Enterprise and Business Research (CEBR) predicted another 38,000 jobs to be cut in the UK IT services sector before 2010. But recently there have been some positive signs, indicating a slow down in the slump within the IT job market, some industry commentators even citing an upturn. The recession has had a dire impact within the IT space, but the IT recruitment world is now starting to show some resilience.

There has been much discussion in the media in recent weeks about the job market picking up, but what evidence is there of this? Is it all a little premature or are we truly starting to see some green shoots within the IT recruitment sector? The IT Job Board conducted some research to discover whether companies are now actively looking to ramp up recruitment, particularly within their IT departments. The overall feeling is that there will be further recruitment, but the industry isn’t so sure, creating a somewhat muddled picture.

The Optimists

KPMG sponsored a survey of C-level hardware and software executives and business leaders. 80% of respondents stated they expect the IT industry to experience increased revenue and profitability in 2010, and that they even envisage the technology industry recovering before most others.

Figures by the Recruitment and Employment Confederation (REC) also reported recently that the UK IT job market is improving, most notably with an increase in permanent positions, the first rise in 17 months.

In an article by Contractor UK, there are claims that recruitment is set to see a 4% increase over the next three months; this will act as a significant boost to the IT space. In turn, the statistics have helped boost positivity amongst job seekers. The article also affirmed that IT professionals are much less likely to be hit by redundancies in the next quarter.

The IT Job Board interviewed a number of recruitment agencies and the consultants we spoke to found that larger corporations do seem to be considering new hires, on the flipside their strategy is to cut out recruitment consultancies in order to improve cost efficiencies.

Kyle Halsey, recruitment consultant at Madison Black, who specialises in contract positions said:

‘There has been a slight increase in vacancies over the last 2-3 months. Last month saw our biggest contracts placements period to date, with every UK contract consultant making a placement at Madison Black. While there was a complete hiring freeze before, hiring managers are feeling more positive and beginning to sign off projects once again. But the general consensus is that of a cautious nature.’

Computer Weekly reported that both KPMG and The Chartered Institute of Personnel have declared in their quarterly reports that jobs are set to increase this quarter. Yet other industry critique contradicts this notion.

The Pessimists

On the other side of the coin, those stating that reports of green shoots are a little premature do seem to have strong reasons to justify this.

Just a fortnight ago, the BBC reported that Fujitsu plans to follow in the footsteps of other major IT companies such as Capgemini and IBM, and cut a further 1,200 jobs in the UK, which equates to 10% of it’s total UK workforce.

This follows a string of cuts made by major corporations over the past year, one of the most high profile was an announcement made by Lloyds in July, declaring their intention to cull a further 370 roles, the majority of which were in its IT support department.

The public sector was hit by the recession far later than the private sector. But over the course of the past year we have seen more and more job losses in this area. Feedback from consultants and hiring managers is that the current freeze on IT recruitment in the public sector is expected to last well in to 2010.

The Consensus

There are positive signs that the state of the IT job market could change in the long term as a number of initiatives are being discussed to combat the crisis. Last week IT giant Microsoft also began its ‘Britain Works’ campaign aiming to create 500,000 jobs before 2012.

Contractor UK even reported that IT firms are considering joining forces with their competitors in order to create an opening for a quarter of a million extra IT jobs over the next ten years.

Furthermore, Gartner released some statistics predicting growth in the global demand for software and IT services of approximately 5% and 4% respectively as early as 2010.

So when can we expect a bit of positive news on the IT job front?

Despite Contractor UK’s report of a 4% increase in IT jobs, this is merely a drop in the ocean compared to the number of jobs that have been cut. So although it seems IT professionals should not fear further redundancies in Q4 of this year, realistically companies will not start a recruitment drive until April 2010 when budgets are renewed.

CEBR did, however, envisage the lowest point of the IT job market to be reached by 2010 indicating the upturn will not officially begin until late 2010 or 2011. So reports of green shoots in the IT job market do seem a little premature as the market stabilises, but at least the storm has passed and once new initiatives are in place we can look towards a brighter, stronger, future IT job market.

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Source: www.theitjobboard.co.uk

How recession is affecting IT departments

It is evident that the recession has hit businesses across the UK and IT departments have also been at the brunt of this. Research conducted by ReThink in May 2009 found that one in five IT Directors in the UK was planning to reduce their head count over the next year, in the face of mounting budgetary pressures. A further 46% expect to continue their current freeze on staffing numbers.

As IT departments were adapting to new commercial realities, The IT Job Board decided to research how IT departments have changed and what this means for your career?

What is the true impact?

Restructuring
There has been a clear shift in the way that IT departments operate with 49% of senior IT professionals stating that they had gone through a departmental restructure as a result of the recession. And it seems that these changes are here to stay with 51% of respondents suggesting these are long-term changes. Common themes within IT department restructures were found to be as follows;

Consolidate and alignment of IT departments on two levels:
i. Regionally – It was stated that a number of departments have moved back to one central location rather than running several regional offices. By doing so organisations have eliminated the duplication of roles.
ii. Consolidation – Through our research we also found that IT functions are increasingly looking to re-align roles so one individual takes on multiple responsibilities becoming more of a generalist than specialist. This, however, has resulted in blurred lines of responsibility and will see IT departments in the longer term lose specialist knowledge and skills.

Focus of IT departments – Senior IT professionals have stated that there is an increasing focus on the short-term delivery of projects. Due to the recession, businesses have been forced to concentrate on projects that bring short-term return, thus more emphasis is now placed on maintaining and developing old systems as oppose to investing in new ones.

Permanent hires – A number of senior IT professionals also stated that they have removed interim staff. This has forced businesses to rethink how they staff departments both in the short and long-term to ensure they are no longer reliant on specialist contractor skills.

Is it time to broaden your skill set?

71% of respondents stated that given the current economy, IT professionals need to broaden their skills to be considered for a role, as the job market has become more competitive. Those most likely to prosper will be individuals that have a wider portfolio of skills so they can cover a variety of tasks.

In addition, there is a need for IT departments to become more commercially aware. Mid to senior IT professionals will be expected to understand the wider business impact of projects. Therefore if you are going for a new role consider emphasising the financial gains/ improved ROI you have achieved for an organisation.

Impact of recession
Overall, the common consensus has been that IT departments have a strong focus on cost saving, which has resulted in a shift in the way IT department operate. Reducing wastage appears to be a key focus for IT Managers, and despite restructuring of departments causing short-term upheaval, the long-term effects could result in significant productivity thus generating greater revenue. However, will the changes made in IT departments stifle innovation as the focus has moved to operational efficiency?

With IT departments changing and evolving rapidly this gives IT professionals an opportunity to do some ‘personal alignment’ themselves. By this we mean assessing what is happening in the IT market and understanding if you need to re-skill yourself to fit in with these changes. With 55% of Senior IT professionals stating these changes are here to stay, it is now about reviewing your skills and making sure they align with what the market is looking for.

Whilst many UK IT professionals are being hit by the recession through extended periods of unemployment or through lower salaries, these latest statistics are just adding insult to injury.

According to APSCo the Association of Professional Staffing Companies which represents many IT recruitment firms, it is believed that almost 30,000 IT professionals came to the UK from outside the European Union last year using intra-company transfers. This mechanism allows organisations to bring in staff from overseas offices into the UK.

In addition to the APSCo statistics, the government’s Migration Advice Committee analysis shows that “IT and telecommunications occupations account for 65% of intra-company transfers, with the vast majority being software professionals, who account for 48% of intra company transfers alone. Most of which are out of country applicants.”

Technology companies and IT outsourcers are said to be bringing in staff to the UK at twice the rate of any other industry. So whilst many software positions are under threat from being offshored, it seems a further portion are being given to non-EU nationals. There is no doubt that IT is a global industry and thus to be competitive international labour is important – however are companies doing enough to utilise local talent?

The Office of National Statistics (ONS) released new figures in May 2009, which reveal that emigration has been steadily climbing since the year 2000. But with so many people emigrating, this leaves a shortage of particular skills and knowledge in the UK.

The issue of emigration for IT however, is heightened by the recession and current trend of Offshoring. But just how big is this issue of IT Professionals moving abroad?

The IT Job Board conducted a survey to ascertain the feeling of the IT industry on the issue of Brain Drain in the UK. And with nearly 76% of you stating Brain Drain of the UK IT professionals as a threat to the IT industry, the results were intriguing.

What’s causing the drain of the UK’s IT brains?

Although nearly 68% of people cited off-shoring as one of the most significant factors contributing to the UK’s IT Brain Drain, most people said this would not impact their decision to move.

The survey showed that respondents see a reduction in contract rates as a major issue contributing to Brain Drain in the UK. As so many IT Contractors have been made redundant over the past year and companies are cutting costs wherever they can, it is no surprise that this is a key concern pushing people abroad.

But perhaps more surprisingly is the fact that the majority of respondents stated that they viewed the long-term prospects of the industry to have a significant or very significant impact to the IT Brain Drain.

Our survey also showed that the majority of those considering a move would leave the country for more than five years. This not only reinforces the underlying lack of confidence in the UK IT industry but also means we could be looking at a more significant shortage of IT professionals than is already projected.

How serious is this problem and where are they going?

Considering the recent turbulence of the UK economy, it seems people are going to more extreme lengths to find work. This includes considering to relocate, and not just within the UK and Europe but also the rest of the world.

According to the ONS, in 2006 32% of emigrants from the UK went to live in Australia or New Zealand, proving this to be the most popular destination. The ONS found the second and third countries Brits are emigrating to are Spain and France.

But emigration choices for IT professionals aren’t necessarily aligned with Britain’s overall emigration trends.

Australia came top in the survey by The IT Job Board with over 60% of respondents selecting down under as their number one choice if they were to move abroad. Yet contrary to the figures released by the ONS, our survey showed the US and the Netherlands in second and third place respectively, suggesting these destinations are more popular with IT professionals.

So why are IT professionals choosing these countries in particular?

According to the IT Industry Competitiveness Index 2008 (which demonstrates how advanced a countries IT infrastructure is and how much the country is investing in R&D and innovation) Australia, The US and The Netherlands are all ranked in the top 10 countries globally. As these countries are actively investing in IT and supporting industry growth they provide much greater opportunity for IT professionals than countries like Spain and France who were ranked outside of the top 20.

Furthermore, the most obvious reason for the top three countries of interest to IT professionals is that The Netherlands, Australia & the US do not present the language barriers that countries like Spain and France have. This makes it easier to integrate into the workforce.

What is the IT market like overseas?

So if you are weighing up the option of moving abroad and considering the US, The Netherlands or Australia, is this a wise move?

The Netherlands
A study conducted by Ernst and Young in early 2009 suggested that most IT Managers in the Netherlands expect that in spite of the credit crisis IT budgets will increase slightly or stay the same. This is the result of survey completed by 600 managers. This demonstrates regardless of the downturn, the IT sector in The Netherlands is still growing. Despite the good news however on the investment front, The IT Job Board.nl have seen a 27% decline in the number of jobs advertised online year on year demonstrating that the IT sector in The Netherlands is not recession proof.

USA
In terms of the US IT market, Phil Bond, President of TechAmerica, told Inforworld.com that the US ‘Tech sector has weathered the storm longer and stronger than most other sectors of our economy’. In addition, the US Congress passed a ‘stimulus package’ earlier this year, which could see the technology industry in particular contributing to economic recovery in the States.

Australia
According to an article by Reseller News, the Australian IT job market is indeed flourishing with a huge increase in job adverts in July 09. In addition Australia is believed to have weathered the downturn far better than most making it one of the most attractive markets for IT professionals to move into.

What does this mean for the future of the IT industry in the UK?

When the economy eventually recovers, does this mean the UK will need to drive an influx of IT candidates from overseas in order to fill the void? Or will off-shoring trends continue meaning the equilibrium is maintained?

With economists predicting a slow economic recovery, it seems only time will tell.

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Source: www.theitjobboard.co.uk

Research published this week by e-skills stated that the demand for permanent IT and telecoms staff fell by 27 per cent, while contract worker demand slid 32 per cent over the first quarter of the year. The study went on to reveal that unemployment in the IT job market has reached a 5-year high, rising to 4.8% for this quarter (previously 2.4%).

Although this paints a gloomy picture of what is happening in the IT job market, the technology recruitment sector appears to be faring quite well when compared to other industries.

Difficulties in finding a job

Research conducted by The IT Job Board on redundancy highlighted nearly 50% of those that had been made redundant, stated that they had been out of a job for between 6-9 months. With the supply of IT professionals growing, employers should be in a position to recruit the best candidates in the market, but is this really the case?

This assumption was, however, contradicted by a survey on the IT recruitment market conducted by The IT Job Board, which found that 20% of employers had faced difficulty in hiring the right candidate for the job. When asked why, the general consensus was said to be that there was a lack of quality IT candidates in the market, and that IT professionals just didn’t seem to posses all the relevant skills required to fulfil the role. However, some employers did state that the positions they were recruiting for were very niche, and they had always faced difficulty when recruiting in this area.

Which skills are suffering the most?

Our research highlighted that IT Managers (19%), Project Manager (28%), Database Administrator (21%) Software Developer (26%) and IT Support (21%), were the skills cited by hiring managers as amongst the most difficult positions to recruit for. When these figures were compared to the research we conducted based on redundancy, we found that these IT professions were victim to the highest redundancy rates too.

How can supply and demand reach equilibrium?

This research has shown that although there is a growing supply of IT candidates in the market, it appears that a high number of quality IT professionals are staying put in their current roles. Reasons for this could be down to IT professionals feeling the instability of the market and have decided that job security is more important.

However, in an era where skills shortages are becoming increasingly apparent, it is up to organisations to take the responsibility to train and develop their staff from the outset. To face this supply and demand issues head on, employers need to refine their expectations of potential candidates. Likewise, candidates looking for a job in today’s market need to ensure their skill set is the sharpest that it has ever been.

Copyright The IT Job Board ©
Source: www.theitjobboard.co.uk