Crystal Umbrella

IT Recruiter CV Screen has confirmed that the second quarter of this year has seen a dramatic rise in the number of IT vacancies registered with them. They have made a comparison between this period and the same period in 2009 and have found the rise equates to a 47% increase. There has also been a 36% drop in the number of applicants per vacancy during this same period, down from 295 to 187. CV Screen has attributed this to individuals choosing to leave their current positions for new challenges rather than being forced to look for work thorough redundancies.

In a press release Matthew Iveson from CV Screen said: “We believe that the affect the recession had on the IT Jobs market is beginning to diminish. Companies are growing in confidence and in turn looking to recruit more staff. They are now able to plan for the future with more certainty. The drop in applications per role could well be a sign that IT professionals are being more selective in the roles they apply for. We have seen them place more importance on career prospects and training that a role offers, rather than just the financial rewards”

Mr Iveson concluded: “We have also seen that more candidates are leaving their roles out of choice, rather than due to reasons such as redundancy. This is a sure sign that the IT Jobs market is heading back towards pre-recession levels”

Figures released by ReThink Recruitment have revealed that two-thirds of the UK’s new IT positions are created in London and the South East. Just two years ago, IT jobs in this region accounted for 58% of openings in IT but this year 64% of openings are in the capital and surrounding areas. This is despite a loss of confidence in recruitment due to the recession.

However, it is believed that the increased show that the banks and financial institutions based in these areas are now “bouncing back” from those hard months and starting to recruit again.

ReThink director, Michael Bennett, commented: “Many of them responded to the downturn by cutting their IT departments to the bone. As businesses levels have picked up, many have found themselves understaffed and have had to replace a lot of the [IT] skills that were shed during the recession.”

London and the South East are not the only regions enjoying recruitment levels equivalent to pre-recession, Yorkshire and Humberside have also seen an increase in hiring in IT. The same could not be said for the rest of the UK.

Speaking to Contractor UK, managing director of Jenrick IT, Philip Fanthom, said: “The proportion of our business, both contract and permanent, has remained at very similar levels to that of pre-recession. We have found [though that] in this recession and the previous ones we have witnessed that London and the South East is often one of the first geographical areas to feel the downturn, but is always the first to bounce back.”

Contractors working in the public sector are already starting to feel the squeeze as spending cuts get underway. IT firms who supply the public sector have been advised they will need to cut their fees by 20%. This request was made at a meeting of all nineteen IT suppliers to the government. At present these firms charge the government in the region of £16 billion.

Francis Maude, cabinet officer minister, confirmed that this “marks the start of the process to renegotiate key government contracts” regarding “everything” that these businesses “do for the government” in a bid to cut costs.

The suppliers involve include such technology giants as BT, IBM, Fujitsu, HP and Serco. According to IT analysts TechMarketView the government will probably choose to curtail the extent or length of contracts rather than seek to cancel them altogether. The government’s CIO, John Suffolk, will be the man responsible for the contract renegotiations.

Mr Maude commented: “Given the really difficult economic climate we now face, we have to do everything we can to deliver better value for money for taxpayers and that involves taking some tough decisions. I am laying down the challenge to major government suppliers to ask them what they can do to take costs out of contracts. Some of this will come out of margins, but we will also invite ideas on how we can structure things differently to reduce complexity and cost.”

The reduction in long term unemployment amongst IT contractors has been attributed to increased business investment across the IT sector. Data shows that investment in IT grew by 9% during the last quarter of 2009. This information comes courtesy of a new study conducted by giant group.

Figures taken from giant group’s database show a drop of one third in the number of IT contractors who were unemployed for three months or more during the first quarter of 2010. This equates to a reading of 6.8% of IT contractors experiencing ‘long term joblessness’ in comparison to 10.1% just six months ago.

Managing director of giant, Matthew Brown, stated: “Contractors are often the first to be let go in a recession, but they are usually the first back in the door as the economy recovers. IT directors are still wary about increasing headcounts, so contractors offer a relatively low-risk way of increasing capacity without incurring additional…[overheads], as demand recovers.”

Of course, contractors are also benefiting from the current economic climate where many employers continue to favour temporary workers as opposed to employing permanent staff. This has also resulted in increased opportunities for contractors in the financial services sector. Of the contractors questioned by giant, 26% stated their belief that the majority of their work would come from the finance sector.

Mr Brown concluded: “The financial services industry is traditionally one of the heaviest users of IT skills, so with banks now beginning to increase investment in IT, contractors should benefit enormously. The wave of mergers in the sector precipitated by the credit crunch and the resultant need to integrate IT systems is a major factor behind the resurgence in demand for IT contractors in the financial services sector.”

The latest signs suggest that the job market is strengthening in the IT sector amongst others.

Recruitment IT specialist CV Screen has analysed the IT sector and has uncovered a rise of 2% for permanent professionals from last year meaning the average salary is now £36,818. A CV Screen spokesperson stated that they have seen an increase in jobs within the sector which also signals recovery. This has been evident since the last quarter of 2009.

However, it is not all positive. Although there appears to be an increase in vacancies there has also been a significant increase in applicants – up 36% over the past year. This has been attributed to a confidence returning to individuals in this sector who were nervous about changing jobs during the recession but now that the sector is recovering, confidence is returning.

Particular skills in demand include .NET skills, Java and PHP expertise. Jobs boards are also increasingly advertising vacancies in SEO vacancies.

It is predicted that this upturn in the sector will continue throughout this year. IT analysis and research organisation, Gartner, believes that spending within the sector is set to increase by 5.7% this year, totalling £535 billion.

New figures released from the Monster index has shown increases in other sectors also. There has been a 5% increase in vacancies within the healthcare sector alongside a 6% increase in PR, media and marketing.

It would appear that the recession has actually brought good fortune to some It workers. For many years, there has been a distinctive pay gap between the north and south of the country, however, with the recent pressures resulting in pay reductions in the south this pay gap is now narrowing, according to ReThink Recruitment. They stated that wages in the north are actually increasing three times faster than wages for positions in London.

ReThink pointed to wages in the north which they said actually increased by approximately 9% in 2009 with an average weekly wage of £640 in the north west and £625 in the north. Conversely, weekly wages in London only increased by an average of 2%.

The agency has attributed these figures to predominance of IT staff within the financial sector which is now only just beginning to recover and thus recruitment is still slow. They also stated that the higher house prices in the south have forced IT staff to move further up the country and, as such, wages have had to remain competitive in those geographical areas. Larger IT employers, such as Siemens, Fujitsu, IBM and Cisco now have bases in the north.

Director of ReThink, Debbie Davenport, said: “”The North of England has been rapidly developing as a major IT hub over the last few years. It is now a serious challenger to traditional IT clusters [in the South] such as the Thames Valley.”

New research data released by Adecco Group suggests that IT contractors will be more in demand than permanent IT staff throughout 2010. The authors of the report commented: “It’s almost certain that the worst is now behind us and that, after battering down the hatches in 2009, [IT] contractors can look forward to a better 2010 and 2011″.

The authors also referred to another study which has been conducted by ReThink Recruitment. This research suggested that rate cuts will only affect 5% of IT contractors this year. Those likely to be affected by rate cuts include contractors skilled in Prince, Windows 2000, Exchange, VPN and Coldfusion if recent activity in these skills sets are any indication. Meanwhile, those skilled in Tibco, Bluetooth and RDBMS are currently in high demand.

The research released yesterday also showed that most IT contractors experienced their take home pay falling below £40,000 during 2009 despite IT salaries actually increasing by an average of 10% during this time.

Adecco stated: “This is not because nearly half of IT contractors earn less than £800 a week, but because many of them have had periods out of work or between contracts.”

Also, last year the highest earning contractors with earnings of over £70,000 became considerably more elite with only 17% of all IT contractors achieving these earnings in contrast to 35% back in 2008.

Any expected increase in job opportunities for IT contractors, however, must take into account the expected cuts in public spending irrespective of which political party wins power in next month’s general election.

The increased demand for IT contractors is behind the recovery in London’s financial district. The number of contract offers for IT freelancers in the City last month was only slightly lower than twelve months ago, showing an unparalleled “revival” in the demand for IT services, according to Alexandra Kelly of Powerchex.

Speaking to Contractor UK, Ms Kelly stated that there was an increase of 57 per cent in the number of offers made to IT contractors between January and February.  She continued: “It is fairly normal to see a small increase in job offers around this time, especially amongst IT contractors to the financial sector. As we come towards the end of the financial year, managers tend to revive non-vital projects as they realise they have money left to spend in their budgets.”

There has also been an increased demand for stockbrokers and investment bankers, although Powerchex found that the demand in these areas was lesser than in IT, at around 30 per cent and 20 per cent respectively although there was actually a decrease in job offers to investment managers and hedge funds. However, on the whole, recruitment throughout the financial sector rose by six per cent between January and February.

There is still a long way to go in terms of full recovery in this sector, though, with most investment management firms still “treading especially carefully when it comes to recruitment.”

The recession has had a detrimental effect on recruitment in the UK but new research conducted by ReThink Recruitment found that IT contractors were actually hit harder than anyone else, particularly as contractor rate reduction programmes were commonplace throughout 2009.

ReThink, a technology staffing company, found that during last year a massive 98 per cent of IT contractors were faced with pay cuts or pay freezes. The average pay cut was around ten per cent. This was in comparison to 71 per cent of their permanent counterparts. The research also found that over half of the IT directors surveyed were planning to freeze pay rates during the coming year and 83 per cent expect that contractor rates will stay the same. It is unlikely, however, that IT contractors will see their pay rates cut this year.

Research suggests that the demand for experienced and skilled contractors is now beginning to pick up again. This is particularly true of contractors who are trained and skilled in LINUX, .Net, Java and C#. Demand has increased for these skills sets over the past three months, which suggests that contractor opportunities are set to increase in 2010.

Director of ReThink Recruitment, Michael Bennett, commented: “Contractors are more vulnerable to market fluctuations, so it’s no surprise they have been hit hardest by the recession. That said, with the job market now tightening rates for contractors should rise ahead of pay increases for permanent staff.”

There seems to be a direct link between the recent demand for IT staff and the recovery of the banking industry. This is the belief of the Association of Recruitment Consultants (ARC) who believe that many companies are looking to upgrade their IT systems as the UK leaves recession. This means that skilled IT contractors are back in demand.

This increase in job opportunities was actually evident in the most recent Report on Jobs from the Recruitment and Employment Confederation, which showed that employment for both contract and permanent staff increased in February.

Chairman of ARC, Adrian Marlowe, said: “As far as IT is concerned, our members have also experienced an increase in IT employment requirements. At the moment, there is definitely an increase in work of that nature.”

He continued: “I think that having laid low for 18 months or so, those organisations that have larger IT requirements are taking the view that they need to upgrade their systems, hence the IT requirement in that regard.”

However, the REC have warned that there will need to be “radical reform” to ensure that the ongoing cuts in public spending do not have a negative effect on recruitment opportunities. Their Report on Jobs did show the sharpest increase in the number of vacancies between January and February through the past 30 months, however the report noted a slowdown in billing for contractors during that period.

Chief executive of REC, Kevin Green, believes that contractor opportunities in the public sector could be set to decrease: “Looking ahead, there are indications that recruitment in the public sector could drop off fast. A new approach to public sector resourcing is now critical and will have a direct impact on the wider employment outlook. We question whether the public sector has the right capability in place to lead the necessary transformation and put in place staffing structures that will keep costs down while improving public services.”