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Organisations urged to review tech contract rates as Hays Technology launches UK Contractor Day Rate Guide 2021

Hays Technology launched its UK Contractor Day Rate Guide 2021, which highlights a positive future career view for many tech contractors. The survey findings strongly show that organisations seeking to engage contractors need to refine their offer in order to secure the best talent. 

Based on a survey of over 600 contractors and organisations that engage them, carried out in May 2021, the survey revealed that demand for technology expertise is increasing while skills shortages persist. The recruiting specialist has recently seen a 21% increase in job demand across technology and a 17% increase in contractors placed from H1 to H2.

More than three-quarters of organisations who use tech contractors expect they will need more IT support from contractors, with 58% predicting the increased need will be driven by peaks in demand and 45%, by the specific skills requirements for one-off projects.

Many organisations are experiencing an IT skills shortage, with 42% saying they don’t have the talent to achieve current business objectives and more than 8 out of 10 finding it difficult to recruit contractors over the last year.

An increased push to platform migrations, begun pre-Covid and accelerated this year, has attracted premiums for some project and change managers, who have seen day rate increases of over 10%. Using data gathered by Hays offices across the UK, based on listings, contract placements and candidate registrations, it appears that overall technology day rates have increased by 0.8% over the last 12 months. There are higher rate rises for some niche skillsets, including software developers with an average day rate rise of 2.4%. There is also strong demand for skills in cloud-based technologies like AWS, and for contractors skilled in Java, JavaScript, Python, and for full-stack developers.

James Hallahan, Director, Hays Technology in UK & Ireland, said: “Skills shortages abound in the technology sector and there are plentiful opportunities for tech contractors to be deployed within organisations that can’t find enough permanent employees with the right skills. Contractors with the most sought-after technical and soft skills, and those with a proven track record for successfully managing projects and leading change are going to expect assignments that deliver on flexibility and terms.”

The guide provides insights into the new ways of working, driven by Covid-19 pandemic and the impact on IR35 reforms this year. Many tech contractors were already working from home for some of the time and over half reported that their work-life balance had improved since March 2020, with almost three-quarters saying that being able to work remotely is important to them.  46% are now seeking greater flexibility with hours and 2 out of 10 say they would change the expectation for them to work outside of their contracted hours to enhance their work-life balance.

The IR35 reforms that were implemented in the private sector in April 2020 have caused concerns for contractors and organisations alike.

James added: “Most contractors want to stay outside of PAYE, presenting a potential shortage for organisations seeking to secure their skills. So, while the increase in activity means there is great demand for tech contractors, organisations are having a difficult time engaging with them. They may need to take an assignment-by-assignment view in order to attract the right skills and work with a recruitment specialist to help them secure the best talent.”

Digital transformation continues apace across all sectors, leaving organisations considering not only the day rate for tech contractors, but where they expect them to be based and how much flexibility they can give regarding working hours, in order to get their new technology initiatives completed.