How to become an IT Contractor - Becoming an IT Contractor

Leading recruitment company, SThree, has announced a steep fall in revenues in 2009, following one of the worst years ever recorded for the industry, however the contract side of the business has held up well despite tough trading conditions.

According to the company, "2009 was by any standards an extraordinary year and was without question one of the most difficult the Group has faced in its twenty three year history. The impact of the global crisis on demand for specialist staff was as tough, if not worse than the dot com crash."

Inevitably, the Group saw a 17.8% drop in revenue compared to 2008, and a 68% drop in operating profit.

More profit per contractor during the downturn

As a result of its "High margin, high value" strategy during the year, the Group's overall contract margin actually improved to 22.1% (2008: 21.5%), a remarkable result in the circumstances.

In absolute terms the average gross profit per day rate (GPDR) increased to £84.69 (2008: £78.30). This represents an 8.1% year on year increase on an externally reported basis or a 1.4% improvement on a constant currency basis.

It is generally accepted that temporary hirings tend to be more resilient than permanent placements during downturns, which is reflected in the fact that permanent placements were down 40.8% over the period, compared to 27.6% for contract placements.

The net effect of the robustness of the contract sector meant that contract gross profit accounted for 58% of the Group's total, compared to 52% in 2008.

Market outlook

SThree also gave the markets its opinion on the state of the recruitment market:

"Towards the end of the year there were signs that certain markets were improving and that others were at the least stable and, so far, this has continued into 2010. Compared with what the Group has been used to in recent times, this was a welcome positive trend which was reflected in the Group's return to headcount growth. Whilst there are indications that confidence is gradually returning to the market and this above all else is what is needed for a full recovery to gain traction, it remains true that in overall terms market conditions have yet to recover to anything close to normal."