IT contractors earn ten percent more than last year

IT contractors are earning an average of ten per cent more than they were a year ago, according to Barry Roback, Chief Executive of JSA Services, the UKís number one specialist accountants for IT contractors. Based on research done among more than one thousand contractors, the average annualised contract value is now 56,540 compared with 49,882 a year ago. The average contract length has also increased from 99 days to 109 days.



Roback puts this increase down to a growth in spending on IT by large companies in the wake of the post Millennium slump, and a rapid increase in public spending in the last two years.

After the Millennium, many IT projects were put on hold says Roback. However, large companies could not afford to hold back on development for very long. Once one started to invest, the others had to restart their projects too, in case they lost their competitive edge.

Roback also points out that there has been a massive increase in public sector spending over the last two years, which has substantially increased the demand for IT expertise. Recent figures from the Centre for Economics and Business Research, for example, show that nearly 60% of GDP in the North East of England and Wales is generated from public spending, while even in London and the South East, it amounts to one third.

Adds Roback: Now that the surplus of contractors has been driven out of the equation, rates have begun to climb due to a shortage of supply, which in turn feeds the panic to buy contractors now, rather than risk waiting when prices may rise even more.

However he warns that the public spending bonanza is likely to tail off after the General Election, whichever party is elected, and there are other factors which may slow down the current boom.

For example, the latest piece of proposed legislation from Brussels - the EU Agency Workers Directive - may have the effect of substantially shortening contracts. This directive seeks to give temporary contractors the same rights as permanent workers after only six weeks in employment. Thus contractors are likely to find long-term contracts harder to secure, as organisations will not want to take the risks involved with offering permanent employment rights to a temp. These would include parity of pay, fringe benefits, redundancy and unfair dismissal protection, as well as possible pension and share option rights.The good news, as far as the highly skilled professional contractor is concerned, is that representatives from the UK are fiercely arguing that limited company contractors should be excluded from this legislation.

Roback concludes: It would be complacent to think that the future for IT contractors is entirely rosy, but there is no doubt that good times have returned, at least in the short-term.