Recruitment fears as contract jobs decline

Drop in contracts may herald fall in permanent jobs vacancies

The number of job vacancies advertised for contract IT staff has fallen for the first time in four years, raising fears of a slowdown in IT recruitment.

The latest SSL/Computer Weekly jobs survey found that demand for contract IT staff declined by 12.7% between the first and second quarters of the year. It highlighted a sharp drop in the number of contract vacancies advertised by software houses and finance firms.

“The fall in demand for contractors may presage a sharp fall in demand for permanent staff. There could be a very lean streak running through to next spring,” said Philip Virgo, strategic adviser at the Institute for the Management of Information Systems.

Advertised vacancies for developers fell by 9.2%, technical support specialist positions were down 11.9%, and freelance project manger roles fell by 18.6%, the survey revealed.

The downturn coincides with the completion of several major projects in the City, including Voca’s payments system, compliance work and chip and Pin roll-outs. 

“A number of big projects in the City have come to an end. Some of the Sarbanes-Oxley compliance projects, which needed expensive contractors, have come to an end, so there are fewer jobs,” said Ann Swain, director of the Association of Technology Staffing Companies.

David Roberts, chief executive of IT user group the Infrastructure Forum, said, “Contractors are an easy way for organisations to reduce their costs. We saw this four years ago when there was tremendous pressure on costs.” If new systems are now in place, IT contractors will no longer be required, he added.

Virgo said that IT departments were increasingly adopting incremental approaches to IT projects, which required fewer contract staff. Government departments are also coming under financial pressure and are scaling back IT projects.

Ben Booth, chairman of the BCS Elite group of IT directors, said economic uncertainty may also be leading companies to recruit fewer contractors. “From talking to business colleagues, there seems to be a softening in demand for business services, which suggests some economic weakness,” he said.

Underlying these factors is the trend to outsource basic software development and support offshore, where they can be carried out at lower cost. This is driving down demand for IT contractors with purely technical skills.

Improved software development tools, which are allowing IT departments to complete projects more rapidly, have also reduced demand for freelance staff, said David Bradshaw, principal analyst at Ovum.

“Software suppliers realised a while back that the difficulty of implementing software and the costs involved was a barrier. They have been trying to reduce the time and effort needed to implement their software,” he said.

Read article: Skills to beat the blues

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