Contractors lead revival in IT recruitment

Article Appeared In: www.itwire.com.au
Author: Peter Dinham 
Date: 22nd of July 2009  

Strengthening demand for contractors has helped bring some renewed vigour back to the IT recruitment market in Australia although salaries and employment conditions remain stagnant as businesses work their way through a tough economy.

As the IT jobs market shows early signs of firming, there’s now greater demand for contractors in several states, with the rise in demand most evident in New South Wales, Western Australia and South Australia, but more constrained in Victoria, Queensland and the ACT.

According to the latest quarterly IT & T salary index from recruitment firm, Peoplebank, while IT employment levels were flat for the three months to the end of June, there was a late burst of contractor opportunities hitting the market towards the end of June which lifted the overall contractor demand.

Commenting on the market trend, Peoplebank’s COO, Peter Acheson said there was a “noticeable firming in the number of contractors being hired in June 2009 – a late improvement that saw contractor levels for the period lift slightly by around 5% over the prior quarter,” and “this trend has continued into July.”

The Peoplebank survey, released today, shows that overall IT employment levels remained lower than the high levels recorded in the first half of 2008 and demand was generally flat for much of the quarter.

According to Peoplebank, the types of contractors being sought are those that are typically sought at the beginning of projects, which the recruitment firm says indicates that there may be the flow-on demand for project execution skills in the medium term.

Acheson says the rise is consistent with Peoplebank’s experience that the contract sector is the “first to respond to strengthened economic conditions, with a corresponding strengthening in the permanent market over the medium term.”

According to Acheson, in addition to the rise in contractor demand, Peoplebank’s clients are evidencing a significant and noticeable shift towards hiring.

 “In our May survey of Peoplebank’s top 50 clients, only six indicated positive hiring intentions and 24 had a hiring freeze in place – and in sharp contrast, our June survey found 19 had positive hiring intentions and 12 had hiring freezes.

”In short, we believe we are seeing the very early signs of green shoots of recovery in the ICT sector: as organisations move ahead with projects, including the much-publicised core systems upgrades in the FSI sector.

“Other enterprises are now proceeding with projects that had been put on hold when the GFC hit, and some are also gearing up – tentatively – with a contract-based workforce so as to respond quickly to strengthening market conditions.”

Emerging trends in individual markets observed by Peoplebank included the contractor market in NSW buoyed by several much-publicised major projects, including core systems upgrades in the major banks, almost half of all demand for IT professionals in the state is for project managers/business analysts, with other skills in demanded including developers (Java/J2EE, Data warehouse/ETL tools), and software and web testers.

In Victoria, Peoplebank found that contract and permanent employment levels had declined over the comparable period for last year, but demand had stabilised in both the contract and permanent sectors. The survey also found that in Victoria, contract rates continued to be scrutinised, and demand was strongest for SAP, storage, security solution architects, project managers, business analysts and testers with FSI knowledge, and for desktop support staff.

Meanwhile, in the ACT, Peoplebank’s survey revealed that the impact of the GFC and departmental responses to the Gershon report’s recommendations around the use of contractors “contributed to an overall reduction in engaged contractors of more than 15% at the end of June, and rate reductions of between 5% and 20%.”

Peoplebank also found that permanent demand in the ACT market had been strong, but, as with the contract market, there had been downward pressure on salary levels, with that downward pressure likely to remain until there was “firm evidence of a recovery across the nation.”