How Contracting Is Growing the Tech Sector


Contracting can be extremely rewarding, from the potential higher earnings and the flexibility and freedom as to how and when you work, to the variety of organisations you get to work with. It isn’t for everyone of course, but for those who have taken the leap and moved away from the permanent work, the majority haven’t looked back.

Is contracting still worth it? 

There’s a long-standing debate over the upsides and downsides of contracting. The financial gains attached to contracting are attractive, as is the flexibility and freedom to work when and how you choose (in theory). But along with the benefits come certain considerations - commanding an attractive day rate doesn’t always equate to a healthy annual salary if you take into account holidays, sick days or dry spells, and there are other things to consider such as looking after your own accounts, pension planning and insurance. Not to mention the new IR35 legislation. 

After an unpredictable year, the job market has been under the spotlight once again, but after an incredible amount of upheaval and uncertainty, there are signs of improvement. But what about the contract market and in particular, contracting in the tech space?

The challenges 

The global pandemic has presented significant challenges over the last eighteen months, as organisations pulled projects, cancelled contracts and downsized workforces. With over 4.2 million self-employed people in the UK, a huge number of people felt these devastating effects.

In addition to Covid, the new IR35 legislation that came into effect on the 6th of April 2021 also had an enormous impact on the market, with many banks and PLCs making an explicit decision to stop using IR35 contractors. 

Bouncing back

It’s not all doom and gloom, as according to, IT contractor demand surged to a 23-year high in May 2021 to levels not recorded since 1998. This was backed up by REC’s Chief Executive Neil Carberry who confirmed there was a “huge bounce in hiring during Q2.” Industry professionals have been quick to report that the contract market overall is at its highest level of demand, growing faster than it has over the last six years, and boasting the highest starting rates it’s seen.

Organisations and contractors alike are benefiting from the new remote working landscape, which allows contractors to work with a wider variety of clients and projects and allows clients to widen the geographical net and access more talent. 

A survey by Hays reported that activity is showing no signs of slowing. In the next twelve months most organisations who utilise contract resource expect a surge in their activity levels - a total of 77% predict an increase, 20% expect levels to stay the same, and only 3% predict levels will reduce. (Source:


IT contract resource has always been highly sought after and inflated rates have been testament to this. The continuation of an IT skills shortage or crisis as it’s been dubbed, means there is an increased need for these skills across the UK. Some contractors have reported their day rates are rebounding to levels higher than 2019, and some have reported an increase of up to 20%.

A survey by Hays reported that rates are indeed rising for the most in-demand tech skills. 60% of organisations surveyed reported the day rates they pay contractors have stayed relatively static over the last year, 28% of organisations confirmed they have increased contractors’ day rates, and only 12% reported they decreased contractor rates in the last twelve months. Looking ahead to the next twelve months, 58% of organisations said they expect rates to remain the same, 39% stated they expect rates to rise, and only 3% expect to decrease rates. (Source:

Skills shortages

There’s an ever-increasing demand for IT and Digital skills in the UK and a recent think tank has warned that the UK is heading towards a catastrophic digital skills shortage disaster. 

Organisations continue to face incredible challenges when it comes to hiring top tech talent. Why? Simple - demand far exceeds supply. The UK doesn’t produce enough highly skilled tech and digital specialists (the number of young people enrolling on IT courses is falling and the industry is lacking in digital skills education) and competition for permanent candidates who are available is stiff. According to The Open University Business Barometer report, the effect this is having on the recruitment process is enormous and in 2020 organisations spent £6.6 billion to plug short term gaps (an increase from £4.4 billion spent the previous year). 

Another factor that has impacted the supply and demand of skills across the UK is Brexit. Ending the free movement of labour between the continent and the UK means employers are no longer able to fill gaps in their workforce with workers from the EU. 

So what roles in particular are in such high demand? Roles include, but are not limited to, Developers (specifically .NET and Java), Software Engineers, QA Testers, Project Managers, Cybersecurity specialists, BI specialists, Security Architects, Data Engineers, DevOps Engineers, and AI and Robotics specialists.

What does the future of contracting in tech look like?

2020 was less than bright as a drop in demand for contract skills swept across the country due to the pandemic. At the start of 2021 the outlook was still unknown, with some uncertainty remaining over Covid and IR35 reforms looming in April. However, the technology market is usually the first to bounce back after economic hiccups, and fortunately, we’re starting to witness vast improvements. A spokesperson for REC confirmed:  

“We now have a consistent picture over the past few months to show that confidence is growing and hiring plans are in motion.” 

Opportunities in the tech sector have skyrocketed, despite a global pandemic, and it’s probably fairly safe to predict that demand for the best tech talent will be even hotter over the coming months. The ongoing skills shortage, in addition to organisations embracing technological advancements at breakneck speed (especially in the areas of AI, ML, Robotics and Blockchain) means quality tech contractors will always be sought after, as they are crucial to business success. 

NuFuture is an IT & Tech recruitment specialist dedicated to finding the right talent for our clients. We’re specialists in our market and our knowledge runs deep. 

Connect with NuFuture today to find out how we can help you. 

Call us on 01344 289224 



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