IT contractors do not appear to be faring as well as temporary workers in other sectors.

The KPMG and REC’s latest Report on jobs shows that recruitment demand for IT contractors has dropped for the 3rd consecutive month, whilst demand in all other sectors is rising. The only area where demand for temps is high is web development. In January this year, demand for IT contractors stood at 58.7 on the REC index. This has now fallen back to 56.4.

KPMG’s head of business services, Bernard Brown, attributes the drop to a fall in demand for IT workers in the public sector. The government has made it very clear that cuts need to be made in public sector spending and it is likely that many organisations froze recruitment in advance of the emergency budget.

Whilst demand for umbrella company contractors in the sector has been falling, the workload for those currently in a contract has been increasing. And this trend could continue for the rest of the year. A recent survey conducted by ReThink Recruitment showed that two thirds of contractors expect their workload to increase and yet less than 50% of them think they will get an increased budget.

However, this downturn in the fortunes of IT freelancers may be about to reverse. NESTA believes that IT contractors could be a driving force in promoting growth in sectors such as aerospace, defence and even pharmaceuticals.

Simon Westlake, from NESTA, also said that there are certain niches where growth can be expected, such as videogames.

Meanwhile, permanent IT staff have been faring slightly better. There is still a demand for techies with enterprise software and IT security skills.

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A decrease in IT budgets could mean that contractors are expected to work harder this year.

ReThink Recuitment conducted a study that shows that two thirds of decision makers in IT think workloads will increase over the remaining months of 2010.

Almost 50% of the respondents are concerned that the increased level of work may not be able to be completed if budgets are reduced.

During the recession many IT projects were shelved, affecting umbrella company workers. These are now being revived. But if budgets are slashed at the same time as demand is increased departments may find it impossible to cope.

More and more IT and communications recruitment firms are joining the REC’s technology sector group. Membership of the group has increased from 160 last year to 406. The REC says they are now the dominant force in telecoms and IT recruitment.

Last year was a difficult year for members of the sector and although conditions are improving there are still concerns over public sector cuts and the changing landscape regarding procurement.

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