Share of IT contractors in the public sector slumps to lowest level in three years

The share of IT contractors working in the public sector has slumped to its lowest level in three years, whilst the number of IT contractors working in the private sector continues to rise.

Data from SJD Accountancy, UK contractor services provider, shows that just 17.3 per cent of IT contractors currently work in the public sector, down from 20.1 per cent this time last year, and 28.5 per cent in August 2013.

SJD Accountancy says the public sector initiated widespread cuts to IT budgets after the May 2010 general election, which led to many technology projects being put on hold and others scrapped. In many cases, contractors bore the brunt of the resulting job cuts.

The firm points out that despite public sector bodies having scaled back their use of contractors, there are positive signs that demand for IT skills in the public sector is set to rise. A recent report has suggested that the UK public sector technology market will grow more than 50 per cent faster than the private sector by 2017.

Nearly 3,000 IT contractors responded to the surveys. SJD Accountancy stresses that overall demand for contractors remains strong as many private sector end users continue to increase demand for IT skills. 

Proportion of IT contractors working in the public sector, 2013-15

Simon Curry, CEO of SJD Accountancy, commented: “Public sector bodies cut back on their use of contractors before shedding staff. The advantage of contractors is that they’re a flexible resource, but their use tends to generate significantly more controversy in the public sector than elsewhere, particularly during times of austerity.

“Revelations that the BBC had 25,000 off payroll workers shone the spotlight on the use of contractors in the public sector and the repercussions of that are likely to be felt for some time. In many cases, growth in the private sector has taken up the slack, which is why joblessness among IT contractors has bottomed out.”

He added: “Contractors are typically the first to feel the pain in a recession but the flipside is that they are usually the first to benefit from any rays of sunshine.

"With public sector IT investment forecast to grow over the next few years, but continued reticence over increasing headcounts, contractors could find more opportunities on public sector IT projects.”

“Even though nearly twice as many IT contractors are seeing rate increases than cuts, there is still volatility in some sectors, such as financial services and oil and gas. A number of banks have implemented further rate cuts this year, and some of the oil majors have followed suit in response to the low oil price.

"The general trend, however, is that joblessness among contractors is low and demand for tech skills is rising, which will make it much harder for end users to insist on rate cuts when contracts come up for renewal.”

The full results of the research, along with historic data, can be found here:

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