The good news for PAYE umbrella techies specialising in IT contracting is that demand for their skills has been impressively robust; however, the less welcome news from the IT jobs market tracker IT Jobs Watch is that pay rates have also been falling.

Several recent indicatorses of demand have shown that contractors supplying the IT skills market have been much in demand, even as permanent IT headcounts shrink. The latest quarterly report from JobsAdWatch, for example, revealed that IT contractor demand is up 21% on this time last year, compared to . Demand for permanent staff limped upwards by just a 6.7% increase for permanent staff over the same period.

In addition to similarly encouraging data from APSCo, recruitment agency SThree has recently reported a 7% rise in the number of contractors placed on live projects this year. The number of permanent IT professionals placed dropped by 0.8%

There appears to have been a price for this resilient demand: IT Jobs Watch records an average 6.5% drop in daily pay rates for IT contractors since 2010, amounting to roughly £27 less per day. In 2010, the average daily rate for the bulk of IT contractors was £415. By 2011, this had fallen to £400 and has now hit just £388.

The squeeze on higher-end earners has been even greater. Last year, the top 10% of IT contractors pocketed an average of £600 a day; today, they are taking home £50 a day less at £550.

Developers, however, have reasons to be cheerful: compared to 2010, they have cheerfully pocketed an extra 7.7% in income.

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