Contractors are faced with an eclectic mix of sometimes contradictory data this month, showing sustained long-term demand in most core contracting sectors, which in turn is tempered with stagnation in the short-term. The upside potential for IT, interim management and oil and gas contractors is clearly defined by reports from industry commentators such as e-skills UK, Deloitte and the Interim Management Association (IMA). Yet the Monster Employment Index shows online demand across all of these contracting sectors, and more, stagnated, or even fell, during June.
In this month’s ContractorCalculator Market Report:
- June’s Monster Employment Index shows stagnation or falling demand dominates online contractor demand with only two disciplines – interim management and consulting, and telecoms – in growth territory
- IT contractors must have core business skills and a broader understanding of businesses’ objectives, reports e-skills UK’s Technology Insights 2012 report
- Demand for interim management contractors increased by 20% in the first quarter of 2012, reports the latest Ipsos MORI survey for the Interim Management Association (IMA)
- Oil & Gas UK’s 2012 Economic Report confirms that the UK’s oil and gas sector is a far larger consumer of contractors from a greater number of disciplines than previously acknowledged
- Deloitte’s Drilling and Licensing Review quarterly shows drilling activity on the UK Continental Shelf (UKCS) rose 64% during the second quarter of 2012, a surge in activity that will directly benefit oil and gas contractors.
Online contracting demand stagnates or falls across all core disciplines
Online demand for contractors across all core disciplines stagnated or fell in June compared to the previous month, although the online labour market as a whole picked up marginally, reports the Monster Employment Index for June.
Several of the key contracting disciplines, including engineering and IT, still showed positive year-on-year growth: 9% and 2% respectively. Management and consulting and telecoms were the only disciplines to see a month-on-month increase in June: 3.5% and 4.1% respectively.
Regionally, the Midlands maintains its lead from last month, and is well ahead of the only other UK region to show growth during June, which was North England. In London, the UK centre for financial IT contracting, online demand for workers fell by 6%.
“Despite some stagnation in the economy, not all is bad in the UK’s labour market,” says Julian Acquari, managing director of Monster UK & Ireland. “We’ve retained the same level of online job demand as this time last year and have seen significant growth across many professional industries.”
Despite some stagnation in the economy, not all is bad in the UK's labour market
Julian Acquari. Monster UK & Ireland
IT contractors “must have core business skills”, says e-skills UK
IT contractors “must have core business skills” and “creative, technical and entrepreneurial skills are not enough”. This is according to a report by IT and telecoms sector skills council e-skills UK, which adds that “technical skills need to be complemented by a balanced understanding of businesses’ broader objectives.”
Technology Insights 2012 [registration required] also forecasts that IT contractor demand will grow at twice the UK average worker demand to 2020, with an estimated 129,000 new contract and permanent recruits required to fill new IT roles and replace those leaving the sector.
The highest levels of contract and employment growth will be “in high skill areas like software professionals, ICT managers, and IT strategy and planning professionals”.
Although recent labour market statistics paint a gloomy picture of the IT contracting market, the number of advertised contract and permanent vacancies has recovered from a low point of 82,000 per quarter in 2009 to more than 116,000 per quarter in 2011.
Demand for interim management contractors increases by 20% in 2012
New interim management contractor assignments leapt up by 20% in the first quarter of 2012, compared to the final quarter of 2011, according to the latest Ipsos MORI survey conducted on behalf of the Interim Management Association (IMA). New client enquiries to interim agencies increased by 18% over the same period.
IMA chairman Jason Atkinson believes that these results indicate a thriving UK interim sector: “The UK’s interim management sector is now worth £1.5bn and this is an industry where Britain leads the world.”
The UK's interim management sector is now worth £1.5bn and this is an industry where Britain leads the world
Jason Atkinson, IMA
Programme/project management was the most common reason for hiring interim management contractors, accounting for 36% of all assignments, with gap management accounting for 22%. Private sector clients were responsible for 54% of assignments, with the public and third sectors accounting for the balance.
Over half (53%) of private sector assignments were in banking and finance, and public sector clients were dominated by local government – accounting for 48% of all public sector assignments.
UK oil and gas sector a major consumer of contractors across all disciplines
The UK’s oil and gas sector supports an estimated 440,000 jobs and contracts across the UK, including contractors in all the core contracting disciplines. In fact, the workforce analysis in Oil & Gas UK’s 2012 Economic Report suggests that the oil and gas sector is a greater consumer of contractors’ services than previously thought.
Oil and gas companies and major suppliers to the sector directly employ and contract 32,000 workers, with a further 207,000 employees and contractors engaged in the wider supply chain. A further 200,000 contracts and jobs are supported by exporting activities and the economic activity of workers in the sector.
This suggests that, in addition to oil and gas contractors in engineering and construction, technical, IT, scientific and interim management disciplines directly engaged in the sector, the supply chain consumes the services of a much broader base of contractors.
The report estimates that for every £1bn invested into the UK Continental Shelf (UKCS), 15-20,000 new contracts and jobs are created. It also confirms that the ‘windfall’ tax imposed by Chancellor in the 2011 budget resulted in a fall in drilling activity of up to 50%, which will have a knock-on effect of substantially reducing short-term investment and contract and job growth potential.
Oil and gas contractors set to benefit from surge in North Sea drilling
Oil and gas contractors look set to benefit from a surge in drilling activity on the UK Continental Shelf (UKCS), which rose 64% during the second quarter of 2012 compared to the same period in 2011.
This is according to the latest Drilling and Licensing Review published quarterly by Deloitte’s Petroleum Services Group. The report also highlights that deal activity – where oil and gas fields are bought and/or sold – in the UK also rose 47% in the second quarter, compared to the same period last year.
“We traditionally experience a rise in activity during the summer months,” says Graham Sadler, managing director of Deloitte’s Petroleum Services Group. “However, this year’s spur of activity reflects a higher year-on-year increase.”
Sadler speculates that the Chancellor George Osborne’s partial u-turn over the punitive windfall tax imposed on energy company profits from North Sea production in the 2011 Budget may be partly responsible for the surge in activity.
“We have some way to go before we are back to the levels seen in 2009 and 2010,” continues Sadler. “The positive announcements in the government’s March [2012] Budget, with regards to the extension and change in field tax allowances, should encourage further exploration, appraisal and development activity.”