Demand grows for IT contractors

Demand for IT staff is beginning to pick up in the UK, but growth is focused on contractors in a job market that remains sluggish, according to an annual study published on Thursday by the National Computing Centre.

The NCC found that while a recovery in demand for IT labour appears to be underway, it is characterised by a reliance on offshore sources rather than local labour and on contractors rather than permanent staff, with salary increase rates remaining flat on last year.

"There remains an issue with permanent employment which gives rise to concerns for graduates leaving university," said NCC group chief executive Michael Gough in a statement. "Outsourcing, particularly in the context of offshore service provision, is significantly dampening the recovery, with recent research indicating poor service quality in many cases."

The average rate of increase on total salary for staff was 3.7 percent over the past 12 months, the NCC said, with the median total salary increase 3.0 percent. The figures come from the NCC Salaries and Staff Issues in IT 2004 study, based on responses from 446 organisations in the UK employing a total of more than 9,600 IT staff. These figures are comparable with those from a year ago, the NCC said.

The highest increases were in the utilities and government sectors, at 4.4 and 4.3 percent, with the lowest in the IT services sector (3.2 percent).

Organisations have significantly increased their reliance on contractors in the past year, with the ratio of contractors to permanent IT staff climbing from 7 percent last year to 13 percent this year. "The significant increase in use of contractors indicates that the IT market, particularly for contractors, may start to pick up," the study said.

However, there was almost no change in the proportion of companies saying they used any IT contractors.

Companies predicted growth in IT staff numbers over the next two years of 3.9 percent, a significant drop from the 6.9 percent of a year ago. The highest growth was predicted in user support, 11 percent, followed by network support, 7.4 percent. Perceived staff shortages were highest in business services, with 6.5 percent; health, education and other services, with 4.3 percent; and IT services, with 4.2 percent.

Some 43 percent of respondents expected the number of IT staff at their site to increase over the next two years, with 17 percent predicting it would decrease and 40 percent predicting no change.

Companies said they most needed Web design skills for 2004, continuing a four-year emphasis. Out of this set of skills, .Net expertise was most in demand. Most organisations said they would bring in the skills they needed through training, at 75 percent, with recruiting at 37 percent and use of contractors at 18 percent.