IT contractors have positive outlook for 2006

- Wage expectations highest since dot com peak
- Unemployment at record low
- Telecoms sector set to reverse two years of decline

Nearly three quarters (72%) of IT contractors think that their earnings will increase over the next 12 months, putting confidence in the IT sector at its highest level since the dot com boom, reveals research carried out by giant group plc, the contractor services provider, among 2,500 respondents.

Two years ago just 54% of contractors were predicting their earnings to rise, while 20% were predicting a fall in earnings, compared to only 3% now.

Comments Matthew Brown, Managing Director of giant group: For the last few years public sector IT spending has been a substitute for subdued spending in the private sector, but 2006 is set to be a year of strong growth across the board.

M&A activity picked up in the last quarter of 2005, and City analysts are expecting this trend to continue in the coming 12 months. Post merger integration of IT systems is vital to the success of M&A deals, so there should be opportunities for contractors.

He continues: Security and compliance requirements should boost IT spending by financial services firms, while resurgent demand for networking technologies should give the telecoms sector a much-needed shot in the arm.

Unemployment hits new lows
Two years ago, 13% of IT contractors went more than 90 days on average between contracts, whereas now only 3% experience this level of uncertainty and difficulty in finding work, reveals the research from giant group.

Over the last few years both the public sector and financial services sector have ramped up their usage of IT contractors, often competing for the same staff, and with unemployment at record lows, giant group expects pressure on rates to remain high.

Of the 2,500 contractors who responded to the giant survey, 28% felt that the financial services sector would present the most job opportunities in the next 12 months, compared to 21% who thought that the public sector would continue to head the contractor field.

Telecoms industry ñ recovery in sight
The percentage of IT contractors working in the telecoms industry has almost halved over the past two years, from 21% to only 12%, but it is anticipated that the telecoms sector will increase its contractor headcount over the next 12 months.

The continued impact of 3G networks is expected to catalyse growth in the telecoms industry, reports giant, adding that M&A activity in this sector, such as Telefonicaís 17.7bn takeover of O2 and NTLís recently proposed acquisition of Virgin Mobile will add to the potential workload for IT contractors in the sector.