Turning against the contractors

The last six months has a common theme for day-rate contractors: lack of work. Larger teams cut heads, businesses have outsourced recruiting, taking away roles, and many did not extend contractors at year-end. We saw like-for-like candidate registrations up by 88% in Q1, while vacancy volumes were flat. A hirer’s market, with less intent to hire.

In our industry, day-rate contract opportunities fell off a cliff as companies looked to engage their recruiting teams as employees. There will be day-raters reading this article who have faced some big decisions in the last six months; many are still out of work three to nine months from finishing their last gig – not because there are no jobs of interest, but because the engagement and pay of those roles is not feasible. This trend is likely to continue.

The hiring metrics do not make for pretty reading
In some firms recruitment has been a contract gig for a long time, delivery roles going for £300-£350 per day with comfortable role scopes. As companies have used this model they’ve also created more data around recruiting and it’s telling a story heads of recruitment do not like. The simplified version they tell us is this: we hired experienced ‘hired guns’ on big rates, we asked them to make lots of hires – some did, some didn’t; we gave them freedom due to their experience; they were supposed to hire directly – some did, some didn’t. We got an expensive recruitment bill for agency use and day rates. We are not doing that again.

Changing legislation
We are all aware of the current climate around engagement of contractors whether it affects you as the contractor or you are thinking about how your company uses them. A simplified recruiting model that avoids exposure to risk makes sense, so until a company knows otherwise they shift to on payroll hires.

Brexit anyone? What about the economy? And then there’s that US election
If you could get a year that consistently creates abstract reasons to feel nervous about the short-term outlook of a business, 2016 would make the short-list. These things have an impact; collectively it creates an environment where companies want to prove they should hire rather than not.

This isn’t about projects and leadership
Those roles will likely still be treated as contractor project roles with appropriate rates but against the backdrop of lower hiring volumes and headcount plans not signed off few are addressing the bigger themes, so these roles have also not come into the market.

The outlook
We currently see the extreme version. The combination of all of the above at the same time creates a perfect storm and that’s leaving a lot of contractors frustrated. As people move slowly back into roles these newer conventions will be challenged and no doubt day rate roles will return, but do not expect the conditions of the last few years to return again soon.

By Andrew Mountney

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