What has happened to contracting?

25 November 2020 John Baker

Cover Tile

Throughout my time in recruitment, the demand for the services of career contractors has largely exceeded supply, and generally, when assessing their next move, these contractors had multiple options to choose from.

In March of this year, all of that changed.

One after the other, businesses both large and small hit pause on projects and programs of work that were underpinning business change. Many contractors were provided with their notice and most businesses who retained contractors generally requested significant rate reductions.

In what felt like an overnight change, many recruiters who managed contract desks were cast into the role of counselor as opposed to a consultant.

Career contractors live with the risks of contracting; the lack of certainty, the lack of annual leave or sick leave, along with the awareness that projects may be shut down at any given moment. But the scale of the shutdown on demand for contracting services this year has been unprecedented. The result was that people who had families to support and had bills to pay were left without any income in a market devoid of opportunity.

The frustrating thing for me was that as much as I wanted to help these people, for a number of months there was little or nothing I could do beyond stay connected.

We persevered and marched forward and finally, September came around which brought with it a welcome return of activity. The phone was ringing again and projects and programs were being taken off ice.

But the market hasn’t returned to normal. Many roles which prior to March would have been offered as day rate contracts are now still being offered as fixed-term contracts or permanent roles.

Clearly, most businesses have been impacted from a revenue point of view this year and may not be able to consider a return to paying what was industry standard for contractors. Equally some businesses are seeking value for money given the volume of candidates still looking for work. Opportunities they previously may have constituted as day rate contracts are currently being presented to the market as fixed terms or permanent roles, resulting in career contractors being forced to consider these positions due to a relative absence of day contract roles.

But what happens when we get back to normal (fingers crossed) next year? What happens when the demand for specialist contracting services inevitably surges?

Some businesses who are hiring these specialist skills into salaried employment are likely to see career contractors leave. Why? These people have set up their finances to be managed through ABNs, family trusts and are only in salaried roles now to bridge the gap.

Other businesses who have retained contractors on reduced rates will see these contractors leave. Projects and programs will be left rudderless and transformations will slow once again until knowledge gaps are filled and skillsets found to replace the people who leave.

So my question is, should businesses get on the front foot? If businesses are starting to hire contractors at something near the usual market rates, should they firstly address the rates of their contractors who have kept the first burning throughout 2020, yet remain on reduced rate contracts? Should fixed-term contractors who have traditionally been career contractors have their contracts converted to a day rate?

This is just my perspective on the market and my question to my client base is whether now is the time to provide certainty to your contractors and lock them into your transformation before the market inevitably bounces back next year? 

For candidates who traditionally contract, what has your experience been? Have the last 8 months left you feeling undervalued?