PAYE umbrella techies specialising in the field of IT contracting may be perturbed to hear of a new and unhelpful trend among some corporate hirers: many are ‘stockpiling’ cash rather than feeding it back into the business, with the result that openings for highly skilled contractors are being squeezed.

The recruitment firm Hudson told the industry news source ContractorUK that the first quarter of 2012 saw significantly fewer billings for IT contractors than the same period last year. Stuart Rogers, Hudson’s associate director of IT recruitment, said: “There has been a noticeable slowdown in the contracting market as clients begin to take a more cautious approach to hiring contractors. Clients believe that significant savings can be made by reducing the contractor headcount and replacing with permanent employees.”

Rogers’ assessment was echoed by ReThink Recruitment’s director, Michael Bennett, who said that more firms are attempting to drive down overall costs by hiring permanent staff for high-end roles rather than using contractors, some of whom are being absorbed into the permanent workforce.

One of the consequences, according to another recruiter (SQ), is that contractors are prepared to work longer hours and accept the same contract with the same pay rates at renewal.

However, this is a trend that may not be possible to sustain, according to ReThink: the permanent skills base for these specialised roles is limited in the UK. Mr Bennett predicts a “tipping point” later in 2012 when companies will be forced to re-hire contractors with specialist skills if key projects are to be delivered.

He added: “So, we are pretty confident that demand will keep holding up well for contractors.”

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