What’s happening in the Scottish IT contractor market?
Posted on 16th March 2015
It’s been an interesting year so far. January, which normally comes back with a bang, was quieter than I anticipated. However, February & March have more than made up for it, and in particular I’m seeing significant growth in the market for contractors and hearing from competitors and friends that this is their experience too. That said, it’s not yet fed through to the Bank of Scotland/Markit survey figures, although their March report will, I suspect, start to show this shift and it could well accelerate thereafter.
There is a huge increase in demand for contractors across the board. Public sector, blue-chips (especially banks), SMEs and the private sector generally are all driving the market in this direction. It is as good an example you can get of the laws of supply and demand. Essentially, demand for contractors is driving up salaries. The number of these jobs is also rising, which ought to hold down salaries, but skills shortages mean the contractors have the upper hand just now.
To make matters worse, many IT professionals commute across the central belt, with contractors driving from Edinburgh to Glasgow and vice-versa, but now, with higher wages and more jobs available at each end of the M8 there is less need to offer this flexibility to employers. Consequently, the market is tightening, with local jobs going to locally-based people who won’t now commute and can demand high salaries because they have scarce skills which employers need.
Moreover, because the good contractors are not interested in taking on permanent roles this can cause a number of issues for recruiters. First, the best people have made enough money that they can afford to sit and wait, for months if necessary, for the next, ideal opportunity. This, of course, increases the pressure on recruiters because it takes scarce skills out of the market. Secondly, a recruiter can be tasked by a company with filling a permanent job, which needs to be filled temporarily in the meantime. So another recruiter is given the task of finding the contractor and the candidates are contacted by two recruitment companies for what is in effect the same job; albeit one recruiter is offering a temporary contract and the other permanent one. Candidates are not daft: they are going to maximise their earnings with the temporary contract.
This mirrors the situation many recruitment consultancies in Aberdeen have found themselves in over the last year or so. Contractors dominated the market there, but the oil companies also needed permanent staff, just as many of the blue-chips in the central belt do today. Some big companies have tried, with varying success, to take as much recruitment in-house as possible, and also to force fees down to a low common denominator. As the supply of candidates in the north-east diminished, the central belt was raided, with promises of untold wealth, but things have all changed with the collapse in the price of oil. And it’s this that offers hope for clients in the central belt.
What we are now seeing, and I think we’ll see more of, is a drift of high quality candidates from the North Sea industries to the central belt, reversing the trend of previous years. This flow is happening now, quietly and persistently, as the oil majors, just as quietly and persistently, reduce some of their operations in Aberdeen. Given that I believe that we’re looking at a medium-long term trend, of 3-5 years of solid and rising demand for contractors, coupled with an expectation of at least one more year of oil prices at current levels, more and more Aberdeen-based candidates will seek to move to the major blue-chips and other firms elsewhere in Scotland and further afield.
Gareth Biggerstaff, MD, Be-IT Resourcing
Posted in News, Recruitment, Research
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