IT contractors becoming more cautious

Economic concerns have hit demand for IT contractors – but only by a little bit.

A survey by contractor services provider Giant has shown that IT contractors are starting to favour long-term contracts, even over higher hourly rates. Some 56.9 per cent of IT contractors who were surveyed said they would prefer longer contracts, up by over six per cent from last year.

Indeed, some 70 per cent of contractors expect a pay raise in the next year, down from 72 per cent last year.

Matthew Brown, managing director of Giant, said that the market remains strong. “The general trend in joblessness has been upwards, but the proportion of contractors out of work long term (three months or more) has remained relatively static at around four per cent over the last year. To put this in perspective, 13 per cent of contractors were jobless for three months or more in 2003, so the market is still in reasonable shape.”

He added that contractors often get a boost during tough economic conditions, as companies look to avoid hiring permanent staff. “What we are seeing is a fairly measured response to the downturn. Some IT projects which will not yield a short-term return on investment are being given lower priority, but the market hasn’t fallen off a cliff by any means,” Brown added.

By sector, better management has left IT departments at financial companies in a better position to weather an economic downturn, and IT contractors in that sector said they are not expecting job cuts to happen the way they did after the dot-com bust in 2001.

A quarter of IT contractors actually expect the best job opportunities in the next year, down only two per cent from last year when the sector was riding high.

Brown said: “The financial services sector in the UK is one of the most important users of IT skills, but there is no sign of panic among contractors. Sentiment is on the wane, but few are expecting a repeat of the mass bloodletting we saw in the 2001/02 downturn.”

“Organisations have been much more restrained in their hiring post-dot com boom, and offshored a lot of their skills base since then, so the UK contractor resources they currently have are leaner and less susceptible to cost-cutting,” he added.

The telecoms sector is also strong, likely off the back of shiny new 3G wireless devices such as the Apple iPhone. The giant survey showed that 16 per cent of IT contractors in that sector expect new jobs to be created, up from 9.7 per cent last year.

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