IT contractors trade earnings for security

As contract work dries up, IT contractors are taking a hit to their annual earnings and accepting more secure permanent positions. That’s specialist recruitment firm Hudson’s interpretation of one of the findings in its January-June, 2009 report, Employment and HR Trends, for which it interviewed 2285 New Zealand employers.

The biannual report predicts the hiring expectations of New Zealand employers over the forthcoming six months. It measures “employer sentiment”, based on the premise that the expectation to add permanent staff represents an indication of employers’ optimism for organisational growth – and conversely their pessimism.

However, Hudson recruitment specialist Chris Ewing says the company is not suggesting contractors are prepared to take lower salaries than others doing similar permanent work. “What we are saying is that, over a period of a year, contractors would earn more than their permanent counterparts. In other words, due to the lack of contracting opportunity they’re choosing to see their annual earnings reduce in order to pick up apparently more secure permanent work.”

This pragmatic shift to permanent work is a trade-off against a reduction in contracting opportunities, Hudson’s report shows. A net 15.6 percent of employers in the IT industry say they intend to reduce their contracting and/or temporary workforce, a result 25.5 percentage points (pp) lower than for the previous period.

Telecommunications employers report a 35.8pp drop in their contracting and temporary hiring intentions, with a net 23.8 percent expecting to reduce their contracting or temporary workforce. Employers in other industries, such as financial services and government, also report an intention to reduce contracting staff numbers.

That the IT industry continues to make the largest positive contribution to employer sentiment nationally is a more prominent statistic in Hudson’s survey. A net 36.1 percent of IT employers report an intention to increase permanent staffing levels over the coming six months.

However, Hudson also says the report shows employment activity is shifting into a holding pattern, as pressure to reduce costs comes from offshore parent companies. A local slowdown is also impacting employment intentions, with many projects, upgrades and innovations put on hold. “On the upside,” says Hudson, “there is plenty of activity in IT sales and marketing as distributors up the ante in order to promote their products.”

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