IT contractor rates 'to rise by up to 7% in 2013'

Friday 14 June 2013

Rising demand for IT skills within business could have an inflationary effect on contractor rates during 2013, it has been suggested. Issuing its latest pay forecast, recruitment firm Jenrick IT said freelancers operating within the technology sector should have plenty of opportunities for temporary work this year.

The firm believes daily pay rates could increase by as much as seven per cent this year, following a positive first quarter, reports Contractor UK. Jenrick IT said Q1 2013 saw greater demand for temporary IT skills than any quarter in 2012, and this pattern is expected to continue for the rest of the year.

The firm predicted contractors will build on the increased fees they commanded in the first quarter with a further pay rise of 2.9 per cent by the start of 2014. And this could have benefits for freelancers operating through a UK limited company, as well as those using umbrella services.

“Contractor rates have increased between January and April by an average of 4.5 per cent,” commented Philip Fanthom, managing director at Jenrick IT. "Our view is that this will continue over the course of 2013 and could tip an increase in daily rates by 7.5 per cent across the year.”

Figures published by the Recruitment & Employment Confederation (REC) support Jenrick IT's claim that contractor demand rose in the sector during Q1 2013. The firm reported an IT employment index score of 54.8 in January, rising to 56.4 in February and 55.9 in March. Figures for the second quarter of the year are expected to show a continuation of this trend, with employers still eager to hire professionals with specialist technology skills.

Indeed, the REC believes the UK jobs market as a whole is faring much better in 2013, with chief executive Kevin Green recently describing it as "the unsung hero" of the economy. He noted that the jobs market has been picking up pace over the last 18 months, following a lengthy period in the doldrums.

"Recruiters tell us that employers are more optimistic and are planning to increase their temporary and permanent hiring," Mr Green stated. "This is supported by the expansion of job vacancies and a slight increase in starting salaries."

He said the "only cloud on the horizon" is the skills mismatch - which in his view is becoming more pronounced. Mr Green said that employers are struggling to find the skilled candidates they need in a number of areas, not just in IT, as they prepare for an upturn in the wider economy. He noted that the majority of people looking for work do not have the expertise required - and this is why the rates commanded by IT contractors and other specialists are continuing to rise.

E-Skills UK has often warned of a looming skills shortage in the IT sector in particular - something which may be good news for contractors seeking placements, but is less so for the economy as a whole. The not-for-profit organisation claimed that the UK needs to produce 129,000 new recruits to fill the vacant IT roles each year, however not enough computing students are graduating from British universities. So with a shortage of candidates to choose from for IT placements, employers are being forced to pay more to secure the talent they require.

By Victoria McDonnell

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