IT sector pay looks set to pass its 2009 peak this year as confidence among IT contractors reaches its highest level since the recession, according to research by SJD Accountancy, the UK’s leading contractor services provider.
Median annual IT sector pay is currently £36,148, compared to £37,094 in 2009, only 2.6% less in absolute terms, and the lowest gap since the recession began.
Despite IT sector pay having yet to surpass its pre-recession peak, upwards pressure on pay is intensifying as the recovery strengthens and the UK tech sector continues to outperform the wider economy.
According to SJD Accountancy, for the first time since the recession, twice as many IT contractors are seeing rate increases than those experiencing rate cuts. 25.4% of IT contractors are reporting an increase in their daily rates, compared to 12.6% who are experiencing reductions in their pay. This is a complete turnaround from SJD Accountancy’s 2012 research, when nearly twice as many IT contractors, 29.1%, saw their rates cut than increase, 17.4%. The full results of the research, along with historic data, can be found here.
Derek Kelly, Chief Executive Officer of SJD Accountancy, comments: “Twice as many IT contractors are now seeing increases in their pay rather than experiencing pay cuts, almost a complete reversal of the figures seen in 2012. This very strongly suggests that IT sector pay should recoup lost ground this year and finally pass its 2009 peak.”
“Having reduced spending on IT during the recession, businesses are now ramping up recruitment as investment in technology revives. Increased competition for the best candidates will inevitably drive up pay.”
He adds: “Many contracts which were negotiated during the depths of the recession will be coming up for renewal. It is becoming much harder for the end client to agree contract extensions at the same rate now that contractors have considerably more choice.”
The research by SJD Accountancy, conducted among over 600 IT contractors, determines the state of the market for IT skills by comparing metrics such as pay, gaps between contracts and reasons for contracting.
The research also reveals that a clear majority of IT contractors 51.2% are ‘very positive’ about the state of the market, a significant increase on the 37.6% of IT contractors who were ‘very positive’ this time last year.
Derek Kelly concludes: “Contractors normally benefit from improving market conditions before permanent staff, so this dramatic increase in confidence over the past 12 months looks set to translate into better pay and job prospects for all IT workers later in the year.”