Relocation the only option for IT contractors
IT contractors are facing the prospect of relocation, or a long spell between jobs. Photo: Karen D'Silva
Arbitrary rate cuts, mass lay-offs and the prospect of months on the bench if you're not prepared to 'go west' is what IT contractors face this financial year.
When business is brisk they can name their own price but with the IT jobs market going off the boil in recent months, contractors are being advised to suck it up, do more for less and shift to where the work is.
Contractors comprise around 40 per cent of Australia's 220,000 strong ICT workforce, according to Peoplebank, one of the country's largest IT recruiters. While demand for their services remains strong in the resources, engineering and utilities sectors, state and federal governments are looking to rein in their spending by cutting back on contractor costs. NSW and Queensland are shedding hundreds of positions and offering to renew others at reduced rates, while in Canberra, demand for contractors has fallen 40 per cent this year, by Peoplebank's most recent reckonings.
Advertisements for contract ICT roles in May were down 9.6 per cent on the previous year's figures, according to the job site Seek, while the numbers from the Clarius-owned IT recruiter Candle paint a similar picture of slowdown. The agency's quarterly skills index revealed a shortage of 5500 contractors in the March quarter, down from 9200 last September.
In some quarters, the assertion that there's a shortage at all will come as news. Queensland IT vendors say their local market will take months to absorb the overflow of contractors who have had their marching orders since the Newman government came to office.
Michael Airton, the CEO of systems integrator Simient, said prospects in Brisbane were limited and laid-off contractors needed to look further afield if they wanted to avoid spending too much time on the bench.
Simient had some contract opportunities but only for workers who were prepared to move to Darwin, Airton said.
Relocation can be the only option for those who can't afford to wait months for a new gig to come up – and in a slow market, it may be something more Australian contractors will need to get used to.
"We can move contractors to other locations if they're flexible," Candle executive general manager Linda Trevor said.
"You need to be very flexible and have to want to be successful, if you don't want to have gaps in your employment."
Peoplebank chief executive Peter Acheson agreed.
"There are jobs out there but we've got to work harder to find them," he said.
"If [contractors] are mobile and happy to move it will only be weeks."
For those who can't shift cities, now is no time to be precious about rates, conditions or whether whatever work is on offer is sufficiently interesting, recruiters say. Taking what's going, even if it's at a reduced rate, is a better option than sitting around waiting for the market to regain traction.
"Most people in my office and other friends of mine who are looking are of the same opinion, accept lower rates, accept anything just to get through," one newly unemployed contractor told IT Pro.
Having to take a hip pocket hit is something more contractors are likely to find themselves doing, particularly in the public sector, as departments try to make the most of softening demand.
The Queensland government has offered to extend some contracts at a 10 per cent discount and it's a similar story in the nation's capital, according to Acheson. Some Canberra contractors had been asked to cut back to 36.25 hours a week while others had been told to reduce their pay rates by 10 per cent, he claimed.
"It's a buyers' market and they're in the position to dictate margins," Acheson said.
Although contractors would view a 10 per cent cut as significant, many were happy to take a rate reduction in return for security of tenure for several more months, he added.
Head of the IT Contract and Recruitment Association Julie Mills said government agencies at all levels had begun demanding more for less and organisations were lowering their contractor rates to retain or win business.
Acheson says successful long term contractors who've kept their skills up to date tend to remain sanguine, regardless of whether the market is booming or breathing with assistance.
"People who've contracted for long periods don't get concerned by ups and downs in the economy. They have a strong word of mouth network and good history and track record and they know they will be in demand."
Tell us about your experience in the contract market. Have you had to relocate to stay in work?