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Contract rates continue to fall dramatically

Published on Dec 7, 2008 | | Contract Rate Checker

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There is growing evidence that average contract rates have fallen dramatically over the past quarter, with more contractors on the bench and those in contract often asked to take a mandatory rate cut.

In late September, we reported that rates for the generic "analyst" role on stats site ITJobsWatch had fallen by 2.16% over the previous 12 months. The percentage drop now stands at just over 6%. The same pattern is repeated across most roles - the generic "developer" role has seen a drop of 8.98% over the past 12 months, compared to just under 6% in September. Roles involving "SQL" are off over 9% over the past year.

Not only are contract jobs being slashed by a number of leading companies - but those who remain in contract are either being forced to take a percentage rate cut, or signing up on lower rates for new roles. A recent report shows that the number of engineering contractors on the bench for over 90 days has also risen dramatically.

Unsurprisingly, financial services contractors were the first to face up to the changes in market sentiment.

A recent report showing that financial services contractors have seen their average rates slashed by 12% over the past 12 months. The research showed that the average contract rate for IT contractors working in the financial services sector is £44 per hour - the lowest average rate for five years. In late 2007, the average rate was £50.

Another site has provided a benchmark for the health of the contracting sector for many years, Jobstats, also shows a rapid decline in average rates over the past few months. In late September, the average contract rate had already declined to £36 per hour across the board. The average rate this week is a mere £31.

Many contractor services providers are also feeling the pinch, with anecdotal evidence from the contracting industry mirroring that in the general economy.

One of our accountancy contacts told us last week: "Business wise, as I know you don't need me to tell you, things are pretty tough, with many contractors closing their limited companies and looking for permanent work."