Contractor demand predicted to surge in Q4 2007

Stan Beer
Thursday, 07 June 2007 18:35

IT People - Enterprise

A supply crunch of ICT professionals will hit the Australian market in the final quarter of 2007, resulting in an explosion of demand for contractors. This is the prediction of John McVicker, managing director of recruiter Best International, which publishes the monthly IT Talent Index report.

According to Mr McVicker, the supply-side crunch hasn't hit yet, however. This has led many employers to be complacent in their attitude to hiring staff, with expectations of finding the skills they need in the marketplace still prevalent.

"I don't think we've seen the supply of permanent labour being exhausted," said Mr McVicker. "We've only had one month this year so far where the increase in demand for contract labour has exceeded the increase in demand for permanent labour. That says people haven't got to the point yet where they're desperate and they decide to just hire a contractor to do the job."

However, Mr McVicker believes the temperature of the market is starting to get uncomfortably warm, with resultant upward pressure on pay rates in both the contract and permanent spaces.

"First, we're going to see some real pressure on wages," he says. "We've seen that happen in the contract market already. Contract rates have risen significantly over the last 12 months.

"I think inevitably there's also going to be some real upward pressure on permanent salaries. We're starting to see little signs of that, where money's becoming more important when people are looking to change from one job to another. Someone might be earning $70,000 and they want $90,000 in their next job because they know that there's quite a bit of heat in the market."

Mr McVicker believes we are still a few months away from a ICT human resources crunch time but warns employers to get ready for some pain.

"I think we've still got a couple of steps to go before people really start to tear their hair out," he says. However, there's no doubt that there's going to be a barrier to growth next year in many organizations who rely on IT or are IT vendors. They just will not be able to get the staff to deliver the projects they need to.

"The talent shortage hasn't bitten employers hard enough yet. We're not at that point where we were six or seven years ago but inevitably we will be if the market continues to grow at the same rate. But we haven't had that nervous jump in the contract market yet. People are still getting jobs filled and they're still getting work done.

"Probably at the start or towards the middle of Q2 of this coming financial year (September to December 2007) I would expect to see demand for contractors to rise significantly."

According to Mr McVicker, demand is shifting toward hands-on implementation type roles, whereas previously it had been highest in the business scoping area.

"The biggest demand now is for people who actually do the work, such as network engineers, administrators, analyst programmer types," he says. "We've already seen big leaps in demand for business analysis and for consulting type roles. If you look at year to date, they're probably up more than 60%.

"I believe that's it's linked to the project lifecycle. That starts off with the management side, involving the scoping of the business case. From there you

head towards the implementation element. We've seen the large increases in demand level off in the consulting and business analysis sector and we're coming

into the project management and implementation type roles.

"However, we haven't yet felt the major brunt of the increases in demand through the real implementation type roles. Those big rises are still to come

although sporadically we're starting to see some of that drop through.

"The two predominant skill sets are around development are Java and .Net. J2EE and Java together represent almost 50% of demand while .Net would be the second biggest at around 30%."