After travelling the countryside meeting ITCRA Members in March all I heard was that business is booming … and then I see the statistics that tell me another story of the market flattening out. How does that work?
From one perspective I read we have a “softening in job ad numbers ….following 10 consistent months of growth”[1]. As this was a comment on the total employment market I decided to check the IT view. So I dived into our own BurningGlass ICT Job Ads Index (which tracks the number of ICT related occupations advertised) and here I see it falling during the last two quarters. Again confirming a downturn.
Yet from another (more positive) perspective, the ABS is spruiking that “total employment surged in March”[2], supported by Seek data presented at ITCRA’s CEO Circle, showing an increase in IT job ad volume of 14% in the last 17 months.
This view of a strengthening market is also supported by ITCRA’s SkillsMatch data outlined in ITCRA’s latest ICT Employment Trends Report Q1 2015 (Jan – March). Our report shows an increasingly competitive market as reflected in the number of days to fill contract roles. Back in September 2014 it averaged 17 days in New South Wales – now it is 45 days. The same shift is occurring in Victoria where it has gone from 16 to 42 days over the same time period.
And now, for another twist in the data, one would think that if it is harder to fill contract roles then hourly rates would increase – but the opposite is happening!
Hourly rates dropped across permanent and contract roles nationally (except for contracting in Queensland, which increased from $82.11 to $89.00). Victoria and Western Australia saw the most significant drops. In Victoria hourly rates dropped from $162.80 in December to $112.10 in March, and in WA it plummeted from $121.24 to $78.50 per hour. Ouch!
This data is also confirmed by research done by tech marketplace Gooroo, who found that tech salaries fell by 6% over the quarter nationally[3]. As we all know, this drop in rates feeds through to the contractors’ and recruiters’ hip pockets. In fact the Remuneration & Benchmarking and RIB Reports are indicating that margins are being squeezed and there is a renewed focus on cost containment.
Confused? Baffled? Me too.
So why are these anomalies occurring:
- Is the ITCRA data incomplete? Possibly, but it is the most rigorous we’ve ever published.
- Is the increase in ‘days to fill’ for contract roles a reflection of the market demand for the limited supply of Digital and Big Data skills? Likely, given the growth in this sector – but it is still not the most requested skill which remains the domain of SQL and JavaScript.
- Is the drop in contractor rates, despite the increase in demand, a result of the ‘new normal’ in which power shifts to the clients who can ‘set the price’? It certainly feels like that.
- Is the growth in contract roles for our ITCRA Members suggesting that employers recruit for permanent roles in-house and outsource contract roles? Again likely.
- Is the growth of online disruptive marketplaces already having an impact on recruitment sectors and margins? I hope not, but this disruption to our industry is something we can’t deny.
- Are we all referring to IT in the same way? Is Digital an IT or Marketing skill and is Business Analysis an IT or general management skill? This could impact the data but probably not enough to shift it dramatically.
- Is this just a Q1 peculiarity? We’ll find out as the year develops.
So, after sifting through countless charts and reports I might, for the time being, go with my gut feeling, which tells me that the market is busy in the contracting space but it is again becoming increasingly challenging to achieve positive outcomes based on traditional formulas and business models.
[1] http://www.recruitment-international.com.au/news/march-labour-force-numbers-reliant-on-participation-rate-21220.html
[2] Full time jobs drive employment improvement in March: ABS” Shortlist, 16 April 2015|
[3] https://gooroo.io/GoorooTHINK/Article/16283/Press-Release-The-average-tech-salary-in-Australia-fell-by-6-between-January-and-March-2015/18210#.VUAgSc6E2MM
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