How IT Contracting has changed since Queen ascended the throne

Contracting Has Changed
Contracting Has Changed

Contracting Has Changed

IT Contracting has changed a hell of a lot since the current queen’s corronation.

Prior to the 1950s, when the Queen ascended the throne, IT Contractors were mainly confined to the scientific or military fields.

The 1950s and especially the 1960s saw Information Technology (or Data Processing as it was then called) enter the business arena.

However, even in the sixties the vast majority of IT workers were permanent.

Even in the early to mid seventies this was the case.

Contracting in the Late Seventies

It was only in the mid to late seventies that IT Contractors considered a career in contracting. Although still the vast majority of IT workers were permanent.

The advent of the PC in the eighties raised the number of IT Contractors. However, it wasn‘t till the nineties that it really mushroomed.

IT Contractor rates and numbers soared then. This culminated in the dotcom boom and bust of the late nineties / early noughties.

Transaction Processing

In the early days of IT it was seen as a cost cutting mechanism but contracting has changed a lot since then.

It was called Data Processing, as that was mainly what it was, and it replaced manual data processing.

This meant that even in downturns the jobs of IT Contractors were relatively safe.

Often they were in even more demand then as enablers of cost cutting through the use of computers rather than people.

Major Downturn

The downturn of 1991/92 was the first time that a downturn really hit IT Contractors.

By that stage computers systems had replaced most people-intensive systems. Management Information Systems bcame more to the fore.

In those days the IT manager wasn‘t on the board and reported in to the Finance Director. The FD saw IT Contractors as an easy way to cut costs easily and preserve the bottom line. That is very important to Finance Directors as their jobs depended on it.

In those days companies got rid of contractors from a project and then hired different contractors in a few months time, who didn‘t know the system, to finish the project.

I was in several places where that happened.

Contracting in the Noughties

The next major downturn was from 2001/3 and that downturn really did hit IT Contractors badly.

With the dawn of the internet and the accompanying dotcom boom along with Y2K there had been a real boom in the number of IT Contractors and in rates.

However, the end of Y2K coincided with dotcom crash and polls at the time showed almost half of contractors out of work and rates plunging.

Technology was changing at that time too with the dawn of the internet, which needed new languages and skills.

Many contractors, with the old skills, never got back on the IT Contracting roundabout after that downturn.

Despair After IR35

There was real despair in the IT Contracting community especially as IR35 had come onto the statute books in 1999. This made the lives of IT Contractors much more difficult.

It spawned the Professional Contractors Group – the first group set up to help IT Contractors.

In the dark days of 2002 people were predicting the end of IT Contracting. One respected pundit even wrote an essay, for a top contractor site, giving 20 reasons why the best days of IT Contracting were over.

Sea Change in Attitudes

However, after that downturn there was a sea change in attitudes to IT Contractors.

A company did a survey of the top 500 companies in America. This showed that the Return On Investment in IT at $4 for every dollar spent. This was higher than on anything else that companies invested their money in.

Also, although there had been the dotcom crash, the internet hadn‘t and would not go away. IT workers, including IT Contractors, were seen as the doorkeepers and enablers of this technology.

Business Drivers

In boom times the main business driver is Time To Market and many products had IT components to them. Even if they didn‘t, they held data about them that they could turn into information.

Many companies that had cut back on projects in the early noughties found that they were now several years behind companies that kept their IT projects going.

It was in this downturn that major companies first started across the board pay cuts for contractors.

Contracting has changed a lot after this downturn.

Hoarding Contractors

Now, when there are downturns like in 2008, companies prefer to keep their systems going. They now prefer to hoard contractors.

If anything takes the hit now it is rates. The major banks and other companies are imposing across-the-board pay cuts of usually 10%, citing market conditions.

However, they prefer to keep on contractors now through downturns. They continue with the systems components of product development making IT Contracting a lot safer career.

IT Contractors as Cost Cutters

They are also back in favour as enablers of cost cutting.

Information Technology is now seen as a major tool for cost cutting. This gives contractors an each way bet in boom times and recession.

Around ten years ago there was great gloom about the future of IT Contracting.

Now, it looks as if it is here to stay – despite IR35, offshore outsourcing and intra-company transfers.

Contracting has changed a lot since those days and will change even more as we go on.