By Chris Bongard
8th September 2015

What is the jobs outlook for IT contracting? It’s a question always at the forefront for independent contractors, as well as permanent employees weighing up the pros and cons of contracting.

The factors for growth are in place

By all indications, the IT contractor market is set for continued growth, driven by a significant skills gap in the UK, and indeed all over Europe. The European Commission recently cited a report that predicts a shortage of up to 825,000 skilled IT workers across Europe by 2020, with the UK named as the second most-affected market.

As the gap takes hold and widens further, the industry is seeing higher levels of IT contractor placements. Contractor numbers in the UK have grown by 35.1% since 2008 to reach 1.88m, and this growth is showing no signs of slowing, according to the IPSE’s latest ‘Kingston Report’. The skills shortage also means a better rate of pay for qualified contractors; over two thirds of contractors are paid more than those working in similar permanent positions.

What’s interesting to us from the Kingston study is that the increase in contractors is structural, not driven by the economy. In other words, we’re not seeing more people contracting because of a lack of other job opportunities, but because they are pro-actively choosing the benefits of contracting and taking their in-demand skills to market for better rates.

Be aware of potential roadblocks

However, there are possible developments on the horizon that all contractors need to be aware of. Potential changes in legislation may have a negative impact on the benefits of contracting in the near future, so if you’re considering the pros and cons of contracting, keep an eye on any developments that could affect you.

For example, as of April 2016 (at the earliest), the government may limit the amount of expenses that contractors can claim for. For those contractors operating though an umbrella company to benefit from tax relief, this would almost certainly remove the incentive to do so. This story will continue to play out over the summer, and may only affect umbrella companies that aren't properly or ethically run. But for now, be sure to read our update here on the impact of the Finance Bill 2016, and keep checking our News & Blog page for any developments.

Another news story to follow – the EU referendum plans for next summer. The outcome on whether the UK stays in the EU or not will have an impact on our requirement to comply with European legislation. Changes to this legislation may remove some of the protections that some contractors enjoy. Again, this is still unknown at the moment but it’s well worth following closely.

Our opinion

All that being said, we continue to be optimistic about the future of jobs for independent IT contractors. In particular, there’s a huge demand for Big Data specialists, business analysts and infrastructure engineers. Whilst we must acknowledge that the severe skills shortage in IT professions is not necessarily good for Britain’s economy as a whole, the fact remains that it’s certainly good news for job seekers who are currently contracting, or looking to explore their options.

We’ll leave you with a quote from Mark Dexter, Managing Director at KDR.

"The contract market is booming due to the number of data and information-related projects being started and growing. As a result of this growth, skills in data visualisation and analytics, as well as back office skills such as data governance, are very much in demand and this growth is showing no signs of slowing."

Future of contracting

What’s your outlook on the IT contractor jobs market? What effect do you think new legislation will have on contractors? Please share your thoughts with us below.

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