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Number of IT contractors out of work halves as demand for IT skills rebounds

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Proportion of contractors experiencing rate cuts halves. Jump in business investment in software and IT services fuels demand. 

The number of IT contractors who are out of work has halved over the past year as demand for IT skills has rebounded, according to research by SJD Accountancy, the UK’s leading contractor services provider.

Just 6.5% of IT contractors are currently not in a contract or are about to start one, compared to 12.6% this time last year.

The research, conducted among over 600 IT contractors, looks to gauge the state of the market for IT skills by comparing metrics such as pay, gaps between contracts and reasons for contracting. The full results of the research, along with historic data, can be found here: /news/contractor_attitude_survey_results.html.

A range of metrics from the research show a steadily brightening outlook for IT professionals. The proportion of IT contractors who have seen their earnings fall over the past year has effectively halved, from 21.2% this time last year to 11.7% now. Contract lengths are, on average, also growing, indicating that end user clients are increasingly willing to commit to longer term projects. Just 9.9% of contracts are currently three months or less, compared to 11.6% in 2013.

Claire Johnson, Managing Director, SJD Accountancy, comments: “These numbers show a very sharp drop in joblessness among IT contractors and provide compelling evidence for strengthening demand for IT skills. Having pared IT departments back during the recession, businesses are now ramping up recruitment as spending on technology revives.”

“With the number of jobless IT contractors rapidly falling, pressure on rates is building. We are seeing a commensurate fall in rate cuts and pay for a growing number of contractors is edging upwards. As the market strengthens and skills shortages bite harder, rates should start to move northwards at a much faster pace.”

She adds: “Spending by IT departments is now on an upward trajectory and Chief Information Officers are starting to lose some of their aversion for longer-term projects. This is leading to longer contract lengths as end users seek to lock-in contractors at favourable rates.”

Official government data shows that business spending on intangible assets, particularly software, jumped 8.3% in Q1 2014, putting business investment at its highest level since Q3 2008, just as the recession began.*

SJD Accountancy says that IT departments are increasing spending on digital technologies, such as web and mobile platforms, as consumers continue to demand greater innovation in how they interact with businesses.

Claire Johnson adds: “With IT departments still somewhat wary about increasing permanent headcounts, contractors provide a relatively low risk way to increase capacity without significantly increasing fixed costs. Digital skills are in-demand, but IT professionals with good business skills, who can marry the strategic needs of a business to technological solutions, are at a premium.”

*http://www.ons.gov.uk/ons/dcp171778_368711.pdf

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