Our tight hiring market looks set to continue, but IT contractors will still be actively sought in 2023

We are all aware the covid-19 pandemic had a profound impact on the way many of us work, particularly for those traditionally office-based.

Overnight, thousands of people found themselves, for the first time, working from home.

Less trying for IT contractors, this transition was a test for many workers, and for companies who needed to ensure they had the right software and systems in place to make it a success.

Two years later, and Microsoft Teams, Zoom and Sharepoint are as much a part of the workplace as conference phones and meetings rooms were pre-pandemic. For many employers, the move to hybrid has been as much about embracing digital transformation as getting the physical office ‘right.’

The rise of digital transformation projects in particular has created enormous opportunity for IT contractors. The labour market is tight, demand outstrips candidate availability, and skills shortages continue to prove a challenge.

Although we’re beginning to see a slight drop in confidence in overall economic conditions, employers are still looking to hire. In fact, the REC’s most recent Jobs Outlook data shows employers in technology still planning to hire both permanent and temporary staff in the next three months.

These demand and supply challenges have resulted in a lucrative candidate-driven market. Throughout the year, the REC has remarked on it being a ‘great time to be looking for work.’

According to one source, “candidates are being choosey, because they can be”.

The demand for higher salaries, more flexibility, enhanced benefits, and ‘good’ company values have become fairly standard requests from candidates. The change in motivation for permanent roles has driven pay up across the board, including contractor day rates.

Looking a bit more closely at the motivations behind permanent versus contract, the picture has changed somewhat post-pandemic, and other issues like changes in legislation (IR35) and Brexit have also had an impact.

For example, the demand across software development has resulted in some contractor candidates choosing to move back into permanent roles because of the much higher salaries on offer.

On the client side, the tight labour market is also affecting hiring decisions with retention often proving a challenge, something we’re seeing reflected in other sectors as well. For long-term work, the preference is still for permanent staff.

We know there’s a role for business and industry when it comes to tackling shortages – investing in skills, implementing Equality, Diversity and Inclusion (EDI) policies and practices, and ensuring working conditions are ‘right’ all matter but the government also has a role to play. We need to see improvements in the careers advice offered at school, we want to see an ‘immigration for growth’ policy that allows our immigration system to flex to the needs of our labour market, and we need clarity on legislation like IR35 (of 2017, and 2021). Ministers should be aware that the political flip flop between reversing it entirely to keeping it doesn’t help, and neither actually address the issues with the off-payroll frameworks.

All in all, the picture for 2023 appears to be fairly positive. While hirers are becoming a bit more cautious, that’s a symptom of the wider economic landscape, rather than anything sector-specific. It’s important to remember the number of vacancies we’ve seen in the last 12-18 months have hit record highs, so some fall back was always expected. But hirers need talented, skilled people and will continue in 2023.

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