Challenges In the Tech Contractor Market

Considering the pandemic (I know, not the best time to look back on) there has been a fundamental change with an increase in layoffs, revisiting projects, and contract cancellations during this period. Around 4.56 million self-employed workers in the UK income has been hugely affected by the pandemic frenzy. IR35, the legislation introduced to address the issue of 'deemed employment', was the next iceberg to hit. 

From 6th April, 2021, contractors have to pay income tax and National Insurance Contributions (NICs) as if they were employees. As a result, contractor roles became more challenging to fill as IR35 made being a contractor less attractive from a purely financial viewpoint. As well as the pandemic, thanks to COVID-19, contractors can work remotely, on-site, or in a hybrid arrangement. Business leaders must understand that this work environment is the new norm and it will likely never change.

Here are 3 factors to how the contractor tech market has shifted:

 

1 - Businesses are outsourcing more projects to contractors

With remote and hybrid work becoming the new norm, businesses have increased their hiring flexibility, seeking out the most qualified from a wider pool of candidates. After the post-pandemic wave of resignations, companies are likely to use contractor specialists to cover shortages of skills and in-house staff. A Harvey Nash report states that 80% of digital leaders believe employee retention has become more challenging since a post-pandemic world has changed employee priorities. In response to these factors, businesses have been outsourcing more of their work internally, creating a growing demand for IT contractors.

 

2 - IT Contractors Change In Priorities

A lot of attention has been paid to wellbeing in the workplace pre and post-pandemic by perm workers. As for contractors' wellbeing, the Spinks LinkedIn Poll found that 44% of tech contractors struggle to strike a balance between work and wellbeing. With the great resignation, the pandemic gave people the time to reassess their work/life balance and understood that they prioritise other responsibilities outside of work.Simply Business reports that 64 per cent of employees planned to spend more time with family and friends. So, competitive pay and basic benefits are no longer enough. It is important that employees know that the company they work for respects them and the community as a whole. Therefore, showering contractors with offers of inflexible employment, workplace stress and shifting their priorities will make your search increasingly difficult when expecting top tech employees, especially for IT contractors at least if you're aiming to retain them. 

 

3 - Tech market skills shortages

Start-ups and scale-ups continue to face a variety of challenges when it comes to hiring top tech talent. The UK is experiencing a major skills shortage as well as an increase in demand for IT and digital skills. In 2020, organisations spent £6.6 billion to plug short-term gaps (up from £4.4 billion in the previous year, according to The Open University Business Barometer report). However, there are many causes for the skill shortage in the tech industry. Some of this could be due to a lack of awareness, diversity, pay disparity caused by gender, Brexit, and confusion about what the benefits are of working in tech. This leads to an increase in contracting roles, since contractors are market experts who possess a variety of skill sets and can fill in skills shortages within an organisation quickly.

 

The future of contracting in tech: what does it look like?

Tech contractors will always be in high demand, as they are essential to business success. With the ongoing skill shortage, coupled with the rapid adoption of new technologies (such as AI, ML, New Energy Solutions, AR, Blockchain etc.), will always make them in high demand. Despite a global pandemic, opportunities in the tech sector have skyrocketed, allowing contractors to choose their well-being and work. Even the new remote/hybrid working landscape benefits both organisations and contractors. Allowing contractors to work with a wider variety of clients/projects while allowing businesses to access more talent from various locations.

So the question is, when should you hire a contractor for your business? If you're not sure, get in touch with Rob Pestridge, Associate Director and our contractor expert, on LinkedIn.