The IT recruitment market started to show the effects of the economic downturn during the second quarter. But the effect is as yet small, does not compare to the calamitous numbers that have been emerging from the financial services, retail and housing markets. IT recruitment companies and IT services companies are continuing to publish good trading results.
Relative to the first quarter of 2008, IT recruitment is down in both the permanent job market (by 8%) and contractor market (by 12%), according to the cwjobs.co.uk Survey of Appointments Data and Trends compiled by Salary Services Ltd (SSL). But to put this in context, IT recruitment is at its lowest level since only as far back as 2007, while the retail market has just reported its biggest sales slump since 1986. Permanent IT jobs are still up on one year ago, and by a healthy 11%, much more than the 1.6% growth in GDP over the same period.
The one metric that is disturbing for IT professionals is that pay levels are stagnating. The rise in the average salary on offer across all permanent job titles was just 0.6%, the lowest level this millennium, while contractor pay rates have not moved at all from a year ago. Both figures are well down on the first quarter, when salaries rose 1.4% and rates were up 3%.
In the meantime, as we all know, prices are skyrocketing. According to the government's CPI measure inflation is running at 3.8% compared to 2.4% a year ago, but anybody who has bought any food, filled their car up or paid an energy bill recently will know that that grossly understates the real inflation level.
The parsimonious salary increases are a clear sign that corporate managements are being very careful. But there is an upside to that: it is one of the reasons why IT has managed to steer clear of the worst of the economic malaise. Investment in IT is one of the major ways companies can reduce costs: as Harvey Nash group marketing director Paul Smith says, "the emphasis today is on reducing costs through infrastructure and technology".
Another reason, says Smith, is that "many companies are engaged on three, five or 10 year projects". Cancelling such projects mid-term would mean both massive write-offs today and saying goodbye to any prospect of the hoped-for future savings, gains in efficiency and competitive advantage.
Looking at SSL's numbers in more detail, all job categories except programmers saw more jobs advertised in the second quarter than in the same period a year ago. PC support jobs rose by a fifth, and there were also notable increases in both the development and management positions on offer.
The market for contractors presents a slightly gloomier picture, as here jobs were down on a year ago, by 9%. This was accounted for very largely by a large fall in recruiting by financial services companies, of almost a quarter. This sector was the largest for freelance positions a year ago, but it is now in second place behind software companies, which increased advertising for freelances by 7% over the year.
Here again demand increased significantly for PC support professionals, who overall enjoyed a very good quarter. Mainstream professionals fared less well, with demand for developers down by a fifth and for software engineers by a quarter. Developers also had to put up with a reduction in average rate offered of 2% compared to a year ago.
The chill wind for developers is driving some out of the market, according to Paul Smith, who says, "some individuals are making a dash for security and leaving the contractor pool".
For some, though, conditions have remained buoyant. Advertising for consultants rose by nearly a half from last year, and demand for project managers was also well up.
Salaries on offer for permanent staff were as already stated up just 0.6%, which compares with 1.4% in the first quarter and 2.6% a year ago. Breaking this metric down by job category, salaries for system developers, programmers, software engineers rose slightly, but those for managers fell (for IT directors by as much as 7%), while the pay on offer to the remaining categories was flat compared to a year ago. Over the whole market, salaries were down from a year ago in 22 out of the 55 job categories analysed by SSL.
Rates in the freelance market were on average exactly the same as a year ago. Database specialists, web software specialists and operators all found the money on offer down on a year ago.
There were some significant shifts in demand for the skills required of job applicants this time. The swing away from Java and towards new wave Microsoft skills has resulted in Java falling to sixth place in the league table, its lowest position for five years, while C#, .net and ASP have all reached their highest ever positions.
This is the culmination of a trend that has been apparent for a few years now. Paul Smith observes, "Three years ago 70% of our developers were working in Java and 30% in Microsoft now it is 65% at least in .net".
Another turning point has been reached with the disappearance of Unix from the top 10 skills for the first time since the SSL league table started back in 1991. Oracle is now the only skill to have featured in the top 10 in every league table since then.
Jobs requiring Unix skills fell by a fifth from a year ago, the largest fall of any skill in the top 25 apart from SAP, which is entering a depressed period after two and a half years of strong demand.
Paradoxically, recruitment agencies are experiencing difficulty in finding the Unix specialists they want, according to Paul Smith. "There is a Unix skills shortage, because most Unix developers are mature and will disappear soon. This is a challenge: getting graduates to move into old technology is impossible." It is an irony that Unix was created by the academic world because of dissatisfaction with the commercially available alternatives, and is now being killed off by academia. The wheel has turned full circle.
The decline of Unix has come about not only because of a swing towards newer Microsoft-based technologies, but also because of a growing preference for the open source alternative. Interest in Linux declined fractionally over the year, but it has been in the top 15 for four quarters now and is closing the gap on Unix: it is now just three places lower in the table.
The open source skill growing most in popularity, however, is PHP, which featured in nearly a third more advertisements than a year ago, the biggest rise of any skill in the top 25. It is now 21 places higher than JSP and only 16 behind ASP. This is a reminder to Microsoft that, though it can take great pleasure in the league table, it is not having things all its own way.
Further details on the survey
This article is based on information contained in cwjobs.co.uk Quarterly Survey of Appointments Data and Trends, compiled by Salary Services Ltd.
The Survey analyses advertisements for IT professionals on the web and in the trade press and the quality national dailies and Sundays. It is primarily intended for recruitment agencies and CIOs with a substantial recruitment requirement.
The posts advertised are broken down in the survey into 55 job categories. Within each job category, the Survey provides details of the number of posts advertised and the average and median national salaries offered for the last quarter and for each of the previous four.
The Survey provides further analyses within each job category by platform type, industry sector and regional location. It also provides a breakdown for the major job categories of the technical skills most in demand. In each analysis, it again details the average salary on offer for each of the past five quarters.
The price of a single issue of the survey is £250, and for an annual subscription is £350. This covers four issues, and includes a free copy of a Windows-based software product on CD which allows selection of combinations of region, industry and software skills for a specified job type. Readers can order at www.salaryservices.co.uk.
Average salaries on offer to permanent staff in 2Q08 in pounds stirling
Change in demand for different job categories on the Web in 2Q08
|Job category||Change from 2Q07|
|All job categories||+11%|
Change in demand by region on the web in 2Q08 change from 2Q07
|Region||Change from 2Q07|
|West & Wales||+32%|
|Scotland & Northern Ireland||+28%|
Change in demand by industry sector on web in 2Q08
|Industry sector||Change from 2Q07|
Skills most in demand on the web over the past quarter
|2Q08 position||2Q07 position||Skill||Change from 2Q07|