Prospects Improve for IT Contractors

Guest post by Gary Pollard, VP of Information Products, IQ Navigator

Contractor bill rates for most professional roles began to recover in the third quarter of 2009, shortly after the U.S. economy resumed growing, albeit slowly. Over the past three years, rates in the professional/managerial sector of contract labor are up 15% from their low point during the recession. Until recently, IT contractors had not enjoyed a similar rebound in bill rates. Limited corporate investment and offshore competition served to keep overall IT bill rates subdued. A gradual increase began in early 2011 and IT rates finally equaled pre-recession levels in January 2012. Since then, median IT contractor bill rates have risen 3.6%, and prospects seem good that the upward trend will continue.

Not all IT roles share the same outlook. Jobs that serve ongoing operations, such as data analyst, help desk or database administrator, have not enjoyed significant increases. The roles that are in demand are those touching the design and development of new applications. Corporate capital spending in software has strengthened; long deferred system upgrades are being addressed and investment is increasing in new capabilities. Frequently used job titles that have experienced notable growth in rates include:

Job Title



Software Architect



Specialized Technical Consultant*



Software Developer



Web Developer



*Specialized Technical Consultant is a broad collection of roles, but the common feature is that the consultant possesses demonstrable expertise in a niche technology, often components of larger systems. They are frequently engaged during design and debugging phases of a project.

Different parts of the U.S. have also experienced varying rates of IT bill rate change. While all regions have seen increases in 2012, the Midwest and West bill rates have risen roughly 2%, while median billing rates have increased more than 6% in the Northeast and the South. Metro areas that stand out include Charlotte, Minneapolis and New York for software architects and specialized technical consultants, and Denver, Los Angeles, Memphis and Washington, D.C. for software and web developers.

After a prolonged period of stagnation, IT contractor bill rates have gradually risen over the past seven quarters, though much of that movement was merely making up ground lost during the recession. Two factors suggest that this upward trend will continue. The first is that corporate capital spending on software has been rising for more than two years, generating demand for skilled individuals to implement these investments. The other consideration is the tightening supply of educated workers. At the end of 3Q 2012 the unemployment rate for workers with at least a four-year degree stood at 4% – not yet back to pre-recession levels but about half the rate for the working population as a whole. Basic economics suggests that rising demand and shrinking supply will further drive up IT contractor rates in the months ahead.


US Dept. of Commerce – Bureau of Economic Analysis
Table 5.5.5U. Private Fixed Investment in Equipment and Software by Type

Labor Force Statistics (CPS) – Table A-4. Employment status of the civilian population 25 years and over by educational attainment,

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