Businesses looking to engage tech contractors may need to rethink their pay rates and conditions, according to new research by Hays Technology.
A survey carried out by the specialist IT recruitment agency in May polled more than 600 contractors and hirers and was used to put together its UK Contractor Day Rate Guide 2021.
The research revealed that demand for technology expertise is increasing, but that skills shortages are hindering many firms’ efforts to hire talent. It reported a 21% increase in demand for IT contractors and a 17% increase in placements from H1 to H2.
Of the organisations polled, 42% said they did not have the required talent to achieve their current business objectives and more than 8 in 10 reported they had found it difficult to recruit contractors over the last year.
This supply and demand mismatch has led to day rate increases for many contractors, with some project and change managers achieving increases of more than 10%. Overall, data gathered by Hays offices across the UK showed that technology day rates had increased by 0.8% over the last 12 months. Software developers had seen an average day rate rise of 2.4%.
James Hallahan, Director of Hays Technology in UK & Ireland, said: “Skills shortages abound in the technology sector and there are plentiful opportunities for tech contractors to be deployed within organisations that can’t find enough permanent employees with the right skills. Contractors with the most sought-after technical and soft skills, and those with a proven track record for successfully managing projects and leading change are going to expect assignments that deliver on flexibility and terms.”
However, the Hays research also found that contractors wanted more than just pay increases: the majority now also wanted to be able to work remotely.
Many were already working from home for some of the time and more than half said their work-life balance had improved since March 2020, with almost three-quarters reporting that being able to work remotely was important to them.
Almost half (46%) now want greater flexibility with regard to hours and two in 10 said they wanted to change the expectation for them to work outside of their contracted hours to enhance their work-life balance.
The thorny issue of the IR35 reforms that were introduced in April remains a sticking point between contractors and hirers, found Hays.
“Most contractors want to stay outside of PAYE, presenting a potential shortage for organisations seeking to secure their skills. So, while the increase in activity means there is great demand for tech contractors, organisations are having a difficult time engaging with them. They may need to take an assignment-by-assignment view in order to attract the right skills and work with a recruitment specialist to help them secure the best talent,” said Hallahan.
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