UK TECHNOLOGY CONTRACTOR DAY RATE GUIDE 2024

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Specialists still needed amidst challenging market conditions Olivier Martin, CEO, ContractorUK

Despite an adverse legal environment since IR35 legislation was put in place, IT contracting seems to still be strong. Amongst the few reasons for this, two seem to particularly attract talent: working from home, and therefore the autonomy given to IT talent and a better value received for their skills, are the major explanations to the unrivalled success of contracting in the IT industry.

That being said, the sociological side of the coin should not be observed without its flip side, the economic history of the paying parties: IT Service companies (staffing, consulting, engineering, TPM, Cloud, AI, etc.) are facing more challenging markets, with conjunction of two and a half years of inflation and international tensions, therefore investing less easily than they would, or retaining their budget. These factors impact the way 50% of IT employers are assigning jobs to their talent, moving out of the “fixed charges model” to a “broker model”.

This aligns with the fact that many UK-based organisations have slowed down their investments, focusing on core business activities. This resulted in a big slump in the demand for IT Services, in a stark contrast with 2021 and 2022.

Unlocking value: The pros and cons of Fractional CTOsAlfonso Ferrandez, Fractional CTO

Alfonso Ferrandez began working as a Fractional CTO in 2020. He started his career in academia, gaining a PhD before deciding to work in the technology sector in the early 2000s. Throughout his career, he has worked across numerous industries delivering complex projects and building teams, often at the forefront of tech development.

We spoke to Alfonso to discover his views on the pros and cons of Fractional CTOs.

What are the benefits of working as a Fractional CTO?

No day is the same: Working as a Fractional CTO means I get to work on different challenges every day. I can be talking to someone in the NHS one hour, then someone in Formula 1 the next, then about rocket launchers, then about electric vehicles. I still get to do the CTO work I enjoy as well as learn new things every day.

Freedom to choose: One of the main benefits of working in a Fractional role is the freedom it gives you. Work-life balance is very positive as you can choose when you want to work. Another important aspect which perhaps doesn’t get spoken about very often is you can also choose who you work with. If you don’t click with a client or their ways of working, or perhaps they don’t understand how a Fractional relationship works, then you have much more freedom to step away compared to a full-time role. It’s quite refreshing that you can do that.

What are the cons of working as a Fractional CTO?

You are your own business: As with any kind of contracting role, you are your own boss, and you secure your own contracts. You need to have a pipeline of work to be successful, so building your network is crucial, but there’s always the risk of work drying up, so you need to be prepared for that. You must also be able to promote yourself. I’m generally an introvert but to be successful you need to be able to explain to clients why they should work with you.

Lack of long-term impact: People often say you can’t make a long-term impact when working in a Fractional role. To me, the instant impact you have leads to a long-term impact and I get a buzz from that. You may not be there to witness a company’s successful growth, but I’ve found that through the relationships I build, clients do keep in touch with how their company is getting on. It’s great to see because you know you had an impact early on that allowed them to get there.

What challenges have you faced working as a Fractional CTO?

Resistance to change: The company’s founder can be the biggest challenge. Sometimes they refuse to listen to advice and are reluctant to change and so they continue to make the same mistakes. When choosing to engage with a Fractional CTO, clients must be open to hearing advice and actioning that advice to gain the most benefit from their investment.

What are the benefits to clients of engaging with a Fractional CTO?

Cost-effective access to experience: By engaging with a seasoned Fractional CTO, clients are getting access to someone with a lot of wisdom at a fraction of the cost because they only pay for the time that they engage us. A few hours a week or month can be enough to keep the company on track and avoid making costly mistakes without paying a full-time CTO salary. Furthermore, if a client engages with a Fractional CTO who has worked across a few different industries, they also benefit from the ‘cross-pollination’ of skills and experience from the challenges they have overcome in different industries. It’s a way of bringing not just specialist expertise but also a new way of thinking into the organisation. 

Instant impact: Engaging with a Fractional CTO means clients get to access expertise very quickly which can have an instant impact. By taking this approach, clients avoid the time and costs of recruiting someone full time, with the risk of them not passing probation or fitting in with the culture. Clients are also engaging with someone who’s only agenda is to make the business successful, and so won’t be influenced by any internal politics and won’t be afraid of having difficult conversations.

Trends impacting the Public Services tech contractor market Amanda Whicher, UK&I Director – Public Services Technology, Hays

Over the past 12 months, digital transformation has remained a significant driving force of investment in tech contractors within public services. Data-driven decision making is the key focus for many organisations, resulting in lots of projects to get the right architecture in place to allow the right data to be gathered. Organisations are continuing to move away from needing the traditional operational technology skills to more investment in Product Mangement, DevOps and Cloud technologies. Cyber security specialists are also in high demand to ensure robust systems are in place across public services, especially as organisations continue to invest in AI.

The different challenges each part of public services encounter adds another layer of complexity when engaging with tech contractors.

Higher education

Whilst higher education continues to develop the modern technology workforce of the future, some of the pressures and challenges on the sector and have meant an increased need for the use of contractors. Over the next few years, we are likely to see the continued implementation of both ERP and potentially Student Systems programmes will require new skills that may not exist in institutions. The work Hays has done with UCISA demonstrates the need for contractors continues given the ongoing pressures in accessing permanent talent in a competitive and skill-short market. As a result, higher education organisations are leaning on contract staff to support these larger programmes of work. Cyber security is also a focus and therefore driving a lot of demand for contractors with these skillsets. Organisations are not only engaging with contractors with experience working within the higher education space, but also those from outside of the sector who can bring their commercial knowledge and expertise when delivering programmes of work.

Central government

Central government is experiencing its own set of distinct pressures. Despite uncertainties in the lead up to the general election, the use of contractors has remained consistently high due to their crucial role across various digital transformation and large-scale technology implementations and initiatives to meet evolving consumer needs and deliver quality online services. Skills requirements revolve around the need to become more data-driven in decision making, and there is increased interest and investment in how to make the best use of AI. Other skills in demand include those related to project management, product management, BA, cyber, software development and service design.

Local government

Although local government organisations face ongoing challenges when it comes to budgets, the priority of delivering services for their communities means there is continued investment in ERP projects and larger scale system implementations such as social care. Whilst challenges remain, some programmes continue at pace as organisations proceed with their digital transformation plans. Another key area of focus for local government organisations is on service redesign to ensure services are accessible to all and fit for purpose for their communities, making these contractor roles highly sought after. As some local government organisations face difficulties hiring permanent staff, they are turning to tech contractors to fill the gaps for BAU work and projects.

NHS

Contractors remain an important source of skills as NHS trusts push ahead with the Frontline Digitisation programme and the implementation of Electronic Patient Record (EPR) systems. There is also a rise in demand for tech contractors who can deliver work related to bespoke clinical systems along with BAU roles across infrastructure. The challenge for those engaging with contractors in this sector is the need for individuals with experience working on NHS systems where there tends to be high demand but low supply.

Resourcing models on the rise Colin Morley, Director – National Enterprise Technology, Hays

We have seen uptake across public services in engaging with a range of resourcing models, including resource augmentation (RA). With the sector’s ongoing talent shortages – and a reported lack of learning pathways – creating more accessible routes to skills has been a key driver for the adoption of RA, which can be used as a vehicle to gain agile tech talent quickly and cost-effectively, while broadening the skills pool available. 

Rather than hiring full time staff, RA provides organisations the means to integrate a team of skilled tech workers at short notice, unlocking specialist skills and delivering on mission-critical projects. And through the model, tech contractors can fall under a capital expenditure (CapEx) remit, helping organisations gain control over their budgets and optimise operational efficiency.