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Why hourly rates for tech contractors are still rising 

Long-established sectors like banking and energy are snapping up IT professionals as digital transformation accelerates

software developer sat in front of monitor with blue hue and projection of code on wall behind

Huge opportunities are emerging for IT contractors in industries once considered out of step with the brave new world of technology. Traditional sectors like banking and energy may have been around since long before the digital revolution but they are developing an insatiable appetite for expertise – and they’re competing with Big Tech for the best people.

We have seen a big jump in rates for contractors as they have accelerated digital transformation in the hunt for efficiencies and competitive advantage. Old economy companies are aiming to use technology to enhance their operations, improve customer experiences and drive innovation. This requires a strong IT workforce and expertise in areas such as data analytics, cybersecurity and artificial intelligence.

In my own country of the Netherlands, we saw average rates for our most sought-after IT contractors rise by 3.5% in the first three months of 2023. Those in IT leadership and strategy roles can now expect to earn €92.08 an hour on average, while professionals with skills in business information, data science and software development earn €88.80.

Ramping up digital transformation

No matter what might be said about the big tech companies, the fact is that the old economy, and particularly banking and energy, is hiring like crazy. Those two sectors accounted for 50% of our placements in the Netherlands in the first quarter. And retail came in third. These industries have real potential for tech professionals because they are likely to ramp up hiring further as digital transformation continues. And they now make up a large proportion of our placements.

This may be partly explained by the tough economy and budget tightening. Fewer of our placements now go to the specialist systems integration companies that traditionally support large businesses. Instead, companies are coming to SThree and our brands directly for individual contractors, which allows them to make considerable savings.

There are other advantages too. We specialise in finding candidates with niche and specialist skills, we have a broader and more diverse talent pool than most systems integrators, and a rigorous sourcing, screening and selection process.

Future trends in tech recruitment

SThree also has a unique perspective on where future demand for tech talent will come from. Rates are rising but we constantly monitor the recruitment market for signs of change. Our view at present is that banking and energy will be among those offering the biggest opportunities for tech contractors in the near term.

Other old economy sectors, such as food and beverages and tourism are also facing up to the need to invest in emerging technologies. Artificial intelligence and machine learning are gaining traction across industries, for example, while the Internet of Things is increasingly popular in retail and manufacturing. Expertise in other technologies is also in short supply, including:

  • 5G networks
  • Quantum computing
  • Virtual and augmented reality
  • Blockchain
  • Cybersecurity

Even with higher rates, contractors are still a more cost-effective option for employers, so they should know their worth. Contractors enjoy better rates, but they also want to work on innovative projects and with the latest tech to help maintain their value in the contract market. Flexible and remote working continue to be an ask of contractors, so serious employers need to meet these needs to attract the best people.

Demand is already outstripping supply

Competition probably accounts for the growing demand from the financial services sector. Companies need to stay ahead in one of the world’s most competitive markets and tackling cybersecurity is critical. That means they need the latest technologies integrated quickly and working smoothly. Banks rely on technology for online banking, mobile applications and financial technology (fintech) innovations.

Contractors are providing a cost-effective way for banks and other financial services firms to maintain workforce flexibility and can quickly adapt to changing business needs. They can simply be used for specific projects such as developing new technologies, applications, or cutting-edge infrastructure as the need arises. And they often bring fresh ideas from the wider world that can help to develop new solutions.

The energy industry is also accelerating its digital transformation to automate, monitor and optimise operations, manage renewable energy sources and implement smart grid technologies. But with so many companies looking for professionals in everything from cloud computing and data analysis software to cybersecurity, demand is already outstripping supply.

Both the banking and energy industries recognise the importance of innovation and staying ahead of the competition. By hiring top talent they can develop cutting-edge technologies, create new digital products and optimise their processes. Both sectors also generate vast amounts of data that can provide valuable insights for decisions making and strategic planning, but they require data scientists to manage it.

The Covid-19 pandemic and the rise of remote working has made it easier for companies to employ experts in different parts of the world and many are now tapping into the global talent pool. This is driving up rates for contractors in parts of the world that have traditionally been thought of as lower-cost regions. We’re now seeing some contractors in Poland commanding the same rates as those in Germany.

More female tech experts are needed

One solution to the shortage of tech skills would be to train and employ more women in technology roles. Women currently only make up around 25% of the tech workforce. Our own data for the Netherlands shows that they continue to be underrepresented although the distribution of women in specific tech roles varies significantly, ranging from 46% in design and management to 7% in DevOps and cloud roles. We desperately need more women in IT roles to help fill the skills gap.

Rising rates inevitably makes the old economy industries more attractive to tech professionals but there is evidence that attitudes towards industries are also changing.

A recent Handshake survey in the US surveyed almost 1,000 graduates and analysed search traffic data. It found that an uncertain economy, tech lay-offs and concerns about AI technologies were major factors in the Class of 2023’s preference for jobs in retail, finance and manufacturing.

Technology is changing and old economy industries are now racing to keep up. That’s good news for contractors who are in high demand but will make recruitment of IT professionals increasingly difficult. Many companies turn to SThree to solve this problem because of our global network of expert contractors and our deep understanding of the skills required to tackle complex projects.

Learn more about SThree’s global brands recruiting right now for tech expertise

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