The growth of contracting
Despite tough times, it seems that the contracting workforce in some industries is not only holding its own, but also growing.
When the economy’s tough, most people’s strategy is to sit tight in whatever job they’re in and sweat it out – a bit like standing under a tree in the rain.
Or so you’d think. Despite the harsh trading conditions, it seems that many people are choosing to move from employment into contracting. A recent survey showed that around 40% of people want to work for themselves – and the number of freelance contractors has gone up from 1.4 million (in 2008) to 1.56 million today. That’s one in twenty working people, now contracting/freelancing.
Of course, there’s another way to look at this trend – that’s a lot of people competing for the same work. Surely that’s driving income down? Is it creating an over-abundance of skills?
Well, it depends what your skills are and in which sector you work. Some sectors are actively recruiting – just as an example, 88% of firms in the oil and gas sector are looking to take on people in the next 12 months. This is partly as a result of advances in oil and gas drilling making hard-to-reach resources far more accessible, which then opens up opportunities to expand the industry’s workforce.
In fact, for such industries (and others, such as the semiconductor industry and the renewable energies industry) contracting isn’t just a useful way to build the workforce, it’s essential – there simply aren’t enough potential permanent employees to fill the available roles.
At Quanta, we’ve found that economic downturns can actually drive an upturn in the size of the contracting workforce. For example, when times are tight, even successful companies keep their workforces lean – and less successful ones have to take tough decisions about letting people go. Many of those people are made redundant because of their employer’s misfortunes, not because of their abilities.
So, the immediate effect is that a lot of highly skilled people are released into the market. Many of these people are so skilled that they decide to take charge of their own destinies – to go self-employed or to contract.
The result is that many of the best-skilled people in particular industries are actually only available as contractors – and the contractor base for that industry expands. Providing the industry is doing well overall, there’s enough work to go around; in some cases, the industry is doing so well, or is expanding its operations, that demand still outstrips the available talent.
These sorts of demands can be tidal – coming in and out as the environment around changes. As you might imagine, the financial services sector is currently running a tight ship, so there have been reductions in the permanent workforce and some drop in demand for contractors.
Likewise, when the Irish economy hit the wall, there was a glut of available contractors. You’d think perhaps that this oversupply would drive down contracting rates, but actually what happened was that the majority of the contracting workforce from Ireland simply relocated and got work elsewhere in Europe. Now that the Irish economy is gaining ground, the number of projects requiring contractors in Eire is growing and these people are being attracted back.
Although some industries are remaining static or shrinking (and so there’s a full supply or even oversupply of contractors), there are some where skilled people remain very much in demand, able to find new work and to maintain (or even grow) their day-rates.
We mentioned some of the energy industries having a positive outlook; the same goes for the semiconductor industry, where skills can be rare indeed, and great people are very much in demand.
So what if you’re thinking about making the move into contracting? Is it for everyone? We feel there are two really key attributes for those wanting to move into contracting. The first, and most obvious, is to have very good skills – and to work at keeping these at the leading edge. At the end of the day, this is what companies are paying for: your skills are your top asset. Next is self-belief; an awareness of your value in the market – the confidence in your own abilities and industry which enables you to take that step away from permanent employment.
With the right skills, in the right industry and with a willingness to work in the right location, there are many opportunities available.