Press releaseWednesday 30 August 2006

PRESSURE ON PAY INTENSIFIES AS JUST 4% OF IT CONTRACTORS NOW SPEND MORE THAN THREE MONTHS BETWEEN CONTRACTS

Only 3% of IT contractors predict pay will fall over next 12 months

Only 4% of all IT contractors go three months or more without work between contracts, the lowest figure for long term joblessness for IT contractors since the downturn, reveals research by giant group plc, the contractor services provider. 13% of IT contractors were jobless for three months or more in 2002, but the proportion has been falling ever since, hitting 5% at the start of 2006.

At the same time the research by giant shows that just 3% of IT contractors are forecasting that their pay will fall over the next 12 months, compared to 5% for the same quarter in 2005.

According to giant group, as the length of time IT contractors spend between contracts decreases, organisations that use contractors will come under growing pressure to increase rates.

Matthew Brown, Managing Director, giant group, comments: "Rates have risen fairly steadily over the past 12 months, but as contractor availability declines pressure on rates should further intensify, so we could see a much sharper rise in rates going forward."

"It’s looking increasingly likely that aggressive headhunting of key IT workers, which characterised the last technology boom, will make a return. This will put strain on IT budgets, particularly in the public sector where cost containment is such a major priority."

According to giant group, growing numbers of permanent IT workers have been entering the contract market as rates have risen, but there is little sign that the influx has acted as a safety valve to further rate rises.¹

"A buoyant contract market tends to suck in opportunistic permanent IT staff looking to maximise their income, but the number of these floating contractors is relatively finite."

¹ Contractors make up 10 per cent of the IT workforce - up 2.6 percentage points since last year (Silicon.com Skills Survey 2006)

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