Contractor prospects in the UK appeared largely promising throughout September, as market reports point towards increased demand for contingent workers. Many businesses are keen to capitalise on improving economic conditions through hiring contractors, whilst demand for IT contractors with specialist skills is particularly high. However, in many areas contingent staff are yet to take advantage of this, with certain reports citing a significant shortage of candidate availability. Notably, continued skills shortages in Scotland are causing increasing concern for the country’s economic growth.
In this month’s ContractorCalculator Market Report:
- Contractor demand is set to surge due to a wave of optimism resulting from improved economic conditions, says September 2015’s Recruitment and Employment Confederation (REC) JobsOutlook
- The deficit between contractor demand and availability continues to grow, and threatens to stifle economic growth, highlights the latest Bank of Scotland Report on Jobs
- Contractor agency billings suffer as a result of skills shortages and the impact of summer holidays on the jobs market, according to the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs for September 2015
- Contractor recruiters in the IT sector are calling out for professionals with niche and specialist skills, according to a recent study from Comensura
- Contractors offer a cost-effective solution as the CBI/PwC Financial Services Survey reports that many companies are looking to stabilise their costs.
Contractors set to benefit from increased demand due to buoyant economy
Contractors can anticipate increased demand for their services, as improving economic conditions have led to a wave of optimism amongst employers. As a result, many companies are keen to capitalise on the buoyant economy by maximising their productivity through the use of contractors.
This is according to the Recruitment and Employment Confederation’s (REC) JobsOutlook for September 2015, which shows that, whilst 94% of businesses are operating at a maximum permanent headcount, 98% plan to either maintain or increase their use of contractors.
With only marginal differences reported with regards to hiring intentions between contracting clients’ short-term outlook (up to three months) and medium-term outlook (4-12 months), contractors can expect to enjoy substantial, secure contracts throughout much of the rest of the year.
The strategic nature of the proposed hires was highlighted by REC chief executive Kevin Green: “People with managerial experience are especially in demand, and this points to the need within many businesses to implement changes in order to boost productivity.”
Both the importance and the cost-effectiveness of the contractor workforce were highlighted within the survey. 73% of employers reported using contractors for short-term access to key strategic skills, while 56% hired contingent staff to reduce business costs.
Contractor skills shortages threaten Scotland’s economic growth
Contractor demand continues to exceed supply in Scotland, as ongoing skills shortages threaten the country’s economic growth. The deficit in Dundee’s video gaming industry is particularly high, while Aberdeen’s oil and gas industry is the only sector showing a surplus of candidates.
Despite Scottish clients’ intentions to secure new hires, the Bank of Scotland Report on Jobs for August 2015 revealed that candidate availability has declined. As a result, the Scottish economy showed continued growth, but at a lower rate than that witnessed in August 2014.
IT & computing is currently second in the demand league table, with engineering and construction in third place. Accounts and financial also remains in growth territory, despite being in seventh place.
ContractorCalculator CEO Dave Chaplin believes contractors in the wider UK could benefit from Scotland’s current market: “IT and financial contractors who are struggling to find contracts in the UK’s regions could find Scotland presents a rich source of potential contracts.”
Contractor availability slumps, worsening skills shortages
Contractor clients continue to struggle to fill roles, while a significant slowdown in terms of growth in contractor demand suggests that cross-sector skills shortages may be beginning to slow projects down.
This is according to the Recruitment and Employment Confederation (REC) and KPMG Report on Jobs for August 2015, which revealed the slowest rate of growth in contractor agency billings since May 2013.
“The number of people looking for a job fell at the sharpest rate seen for a year, leaving unfilled posts across the economy,” highlights Bernard Brown, Partner at KPMG, who attributes the shortfall in candidates to skills shortages and the impact of summer holidays on the jobs market.
Contractor demand also recorded its slowest rate of growth in 26 months, prompting concerns from REC chief executive Kevin Green that it could begin a negative trend: “Because of the scarcity of talent available, we expect that employment will continue to grow but at a slower speed than we have seen over the past two years.”
Construction has dropped from first to eighth in the demand league table, although this is believed to be down to a wave of optimism in the sector prompting more permanent hires, as a result of a period of expansion. Meanwhile IT & computing came in sixth and engineering also fared poorly in seventh spot.
IT contractors with niche skills to enjoy opportunities in buoyant market
Contractors in the IT sector with niche skills can expect to see demand for their services rise after contractor recruiters reported difficulties sourcing candidates for specialist roles. This comes in spite of a high volume of candidates, suggesting that contractors who explore specialist training in undersupplied areas of the sector can get ahead in the market.
A tendency amongst contractors to target front-end positions has left a deficit of candidates with the skills necessary to fill roles in IT development, architecture and security, according to a recent study [registration required] from supply management company Comensura.
“The IT contractor workforce is flourishing and competitiveness is at a premium,” notes ContractorCalculator CEO Dave Chaplin. “It is important for contractors to seek out gaps in the market, such as those highlighted in this study, in order to ensure they stay in high demand.”
The shortage comes in spite of a particularly prosperous and competitive market. According to 77% of survey respondents, demand for IT professionals is set to rise upwards of 10% in 2016. Meanwhile, half of those contractor agencies surveyed describe the overall availability of candidates as ‘high/very high’.
Finance contractors could offer solution to cautious market
Financial and IT contractors in the UK’s financial sector could see their prospects improve after optimism in the industry flatlined. The quarter leading up to September 2015 ended a three-year run of optimism growth, as sentiment remained largely stagnant. This, in turn, is expected to cause many companies to reconsider investment intentions.
This is according to the latest CBI/PwC Financial Services Survey, which reports that growth in profits is also expected to slow down over the next three months, with the majority of firms subsequently ruling out any potential hiring activity.
Profit growth slow-down is compounded by findings that almost a third of firms reported difficulties sourcing professionals, and consider the lack of candidates to be a factor contributing to the anticipated limitation of growth over the next 12 months.
The desire for economic stability and the reported skills shortage both bode well for contractors in the sector, who can provide the necessary expertise cost-effectively.
“The winds of volatility blowing through global markets have left a clear mark on the financial services sector, impacting business volumes and investment intentions, particularly in investment management and securities trading,” highlights UK financial services leader at PwC Kevin Burrowes.