IR35 status is a big worry for IT contractors considering their next gigs, while it doesn’t seem to bother off-payroll workers in other sectors as much. That’s what Sapphire Contracting found in their recent research involving 2,300 contractors for the Contractor Census 2024.
When they asked what factors affect a contractor’s decision to take a job, pay rate topped the list at 87%. Location followed closely at 78%, and then the length of the assignment at 47%. But when it came to IR35 status, only 16% of all respondents said it mattered. For IT contractors, though, that concern jumps to 31%.
Alex Moore, the business development director at Sapphire, noted that unlike other industries, IT contractors still feel the impact of the IR35 reforms brought to public and private sectors. “While others have adjusted, IR35 is still a key issue for IT contractors,” he explained. The financial implications of being labeled inside IR35 can be huge, making it important for contractors to keep themselves updated.
The report points out that sectors like construction, engineering, public services, and health care are in a better place. Contractors in those fields express optimism about their futures. In contrast, IT contractors aren’t seeing the same positive trends. There’s been no growth since August 2023, and the demand for temporary IT skills has declined for nine straight months.
The upcoming general election is casting a shadow over the IT market’s recovery. For example, a June update from Indeed.com revealed that IT operations and helpdesk roles are among the weakest on the job site, with new roles in that area dropping by 19% since the end of 2023.
On a brighter note, many UK businesses are shifting towards outsourcing their IT services to save money. Moore mentioned, “There’s a growing interest in outsourcing IT functions, which helps companies cut costs and focus on what they do best.” The rise of cloud computing and digital technologies is also fueling the demand for IT services.
To really attract top IT contractors, companies need to cater to their specific needs. “Given economic pressures and emerging technologies like AI, businesses must pay attention to what IT contractors want,” Moore said. Addressing IR35 concerns while offering competitive pay and stable contracts will be essential for securing the best talent in an increasingly selective market.