IT Contractor Rates Rising – New Boom on the Way?

IT Contractor Rates Rising
IT Contractor Rates Rising

IT Contractor Rates Rising

According to Nixon Williams, we now have IT Contractor rates rising faster than they were before the Brexit vote.

That’s despite the uncertainty Brexit causes.

Or is it because of the uncertainty Brexit causes?

Companies are far more likely to hire contractors in times of uncertainty than permanent employees.

After all, why take on long term employees, and add to your cost base, whilst the future is so uncertain?

Uncertainty Less Damaging to IT Contractors

Derek Kelly of top Accounting firm, Nixon Williams sees a reason for it. “From a hiring perspective, the current uncertainty is likely to be less damaging to contractors than permanent employees.

“Employers are likely to be reticent to commit to permanent hires,. So, any business transformation projects related to Brexit will be of limited duration and require highly specialised skills, making them ideal for contractors.”

IT Contractor Rates Survey

According to a survey of 600 contractors by Nixon Williams, 20.5% of IT Contractors report an increase in their rates.

That’s against 16.6% who are reporting that their contract rates are falling.

Prior to Brexit 19.4% reported rising contract rates. That’s against 18.6% who saw them falling in June last year, prior to Brexit.

So, that’s a positive rating of 3.9% now as opposed to a positive rating of just 0.8% just nine months ago.

This is not huge – but it is going in the right direction.

EU Referendum Fears

Derek Kelly, believes that people are overdoing the Brexit fears. “The fear was that the EU referendum result would send the jobs market into a tailspin, and that contractors would be first to feel the pain.

“Even though IT is often regarded as a discretionary spend, technology is key to increasing worker productivity. In that respect, IT contractors are likely to find that demand for their skills holds up well this year.”

Well, that’s good news.

Positive Contractor Market News

It’s good news that there is a positive rating for IT Contractor Rates rising to almost 4% now as opposed to less than 1% last June.

Why is that so good?

It shows that the IT Contractor market has now passed its equilibrium phase and is now heading towards contract rate rises. These will become more pronounced.

Economic Laws of Supply and Demand for Contractors

According to the economic laws of Supply and Demand, the price of a commodity will fall if Supply is greater than Demand. The price will rise if Demand is greater than Supply.

Previously contract rates were falling.

It looks like they were in near equilibrium last June when Supply and Demand must have been just about equal.

It’s Now a Rising Contractor Market

With IT contractor rates rising, this means that Demand for IT Contractors must now be greater than the Supply of them.

It’s not a huge difference at the moment with still only around a fifth of contractors reporting rises.

However, the market tends to continue to go in a particular direction for long periods.

So, we should expect the number of IT Contractors reporting rate rises to be even higher in the coming months and probably years.

IT Contractor Market Boom Times

While we are a long way away from an IT Contractor boom, that is the direction that we are heading.

There will be more contractors needed.

So, that’s at least some good news for contractors when they are coming under attack from IR35 changes in the public sector.

It looks as if the IT Contractor market is now passed its point of equilibrium and we shall expect to see Demand for contractors continuing to grow faster than the Supply of them.

That will be very good news for contract rates.

Looks like we are in the right profession.



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