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Rises in permanent IT pay closes the gap on IT contract rates

August 24, 2007

Following the rise in (median) hourly rates reported during Q1.07, the latest findings from SkillsMarket/ATSCo’s iProfile Skills Survey showed that IT contract rates remained unchanged in Q2.07 at £40 per hour, whilst (median) permanent salaries rose slightly (less than 1%) to £35,000 per annum.

(Index is taken from a baseline figure in Q2 2002 and is based upon pay rates of permanent and contract IT staff)

Both contract and permanent IT staff have seen a steady rise in their overall pay rates since early 2004, following dramatic falls the previous two years. It is the permanent market, however, that has experienced the biggest increase in pay rates since the dot.com boom. These individuals now earn 29% more than they did back in early 2002, whilst contract IT staff have only seen a 14% increase.

Alex Charles, Product Director and founder of SkillsMarket, commented: “Whilst permanent IT staff have seen the biggest increases in pay rates since 2002, it is worth remembering just how hard the contract market was hit after the dot.com boom. When comparing contract pay rates from their lowest point in 2004, IT contractors have in fact seen a 24% increase.”

Charles continued: “In spite of the problems in the US debt market, the UK IT market remains strong. Companies are still struggling to recruit good permanent IT staff and as a result are having to take on contractors. Like most markets though the UK IT market is cyclical and because of the importance of the financial services sector the momentum could soon be affected.”

Ann Swain, CEO of the Association of Technology Staffing Companies (ATSCo), commented: “Our members reported a good second quarter for 2007, with the demand for both contract and permanent IT staff remaining strong. Indications from members are that the demand for IT staff will continue to increase during the rest of the year, which means finding good candidates will become increasingly difficult. The passive job market is therefore key to meeting the recruitment challenges now faced by employers, which is why it is essential that recruitment companies invest in having an up-to-date candidate database that can be accurately searched against.”

Leading IT recruitment companies provided the following comments on the market in the survey:
Aidan Anglin, Managing Director of IT Recruitment Services at Spring, commented: "Spring Technology has seen an increase in the demand for both permanent and contract staff throughout the second quarter of 2007 and information provided by the REC’s Report on Jobs suggests that Internet job advertising has increased by 38.9% on the previous year.

In Spring’s experience, this increase has been largely fuelled by the financial services sector. This is a major growth area, particularly around Project Management, Business Analysis, Consultancy and niche development. In spite of recent trends towards off-shoring certain skills, the market sees the benefits of retaining key strategic elements of projects on-shore. Technology is a key differentiator. Integration work is high on the priority list due to the high levels of mergers and acquisitions taking place in the current market and therefore the associated skills are heavily in demand.

Spring has also experienced an increase in permanent and contract pay rates. The increase in salaries is seen as a result of a combination of the growing demand for IT staff coupled with the declining availability of quality candidates.

The particular skills being sought include Java, SQL/database querying, Modelling languages (XML, FPML), Microsoft development languages such as .net, C# and knowledge of niche investment banking platforms (Bloomberg, Murex, Summit, Calypso, Smartstream, Wall Street, Rolfe and Nolan).

Salaries are set to soar again this year as employers seek to meet this growing recruitment challenge.”

Rory Ferguson, Director at JM Group (Search & Selection), commented: “We found the demand for permanent IT staff remained strong during the second quarter of 2007, particularly for specialist business, or financial product knowledge and especially around exotics and hybrids. Whilst salaries continued to be competitive, we saw a marginal overall increase of 1.6% in Q2 against the previous quarter.

We experienced an increased demand for C# in the second quarter and the primary business focus has been credit and interest rate derivatives.

At JM Group we anticipate that demand will remain strong throughout the next 6 months.”

About the iProfile Skills Survey:

The iProfile Skills Survey is the most comprehensive guide to IT pay rates and is produced each quarter by SkillsMarket.

The report was commissioned by the Association of Technology Staffing Companies (ATSCo) in 2002 to replace a gap in the market for pay rate analysis based on actual IT pay rates rather than those displayed in job advertisements.

Since its launch it has become the industry’s benchmark for IT contract and permanent pay rates and is also used to monitor market trends. The report enables recruiters to analyse the value of an IT professional based upon their role, skills, experience, industry sector and UK location.

The analysis for the report is produced using the results from a quarterly survey to IT professionals that own an iProfile. The iProfile is the industry standard format for “the online CV”. The analysis of the survey for Q2 2007 was based upon over 5,000 IT professionals.

The report can be purchased from SkillsMarket by contacting Michelle on 020 7025 0555 or click here to email us.

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