It’s that time of year again. Time to look into the crystal ball and predict recruitment trends. Here’s my personal view of what IT employers and Heads of IT can expect over the next 12 months.
1. Fewer IT contractors, but with higher rates
Changes to IR35 could result in fewer IT experts becoming contractors. It started with the announcement of reforms in the public sector last year. The result was a contractor exodus from the public sector and some increased their ‘public sector rate’ by 20% to compensate for the additional tax.
Extending the reforms to the private sector could have a similar effect. The Government is also concerned about the tax deficit. The Treasury estimate the shortfall in tax collected from the self-employed compared to employed workers is £3bn a year. There are rumours it intends to raise self-employment taxes to narrow the gap.
I thought the 2017 Autumn Budget would include an extension of IR35 reforms to the private sector. It didn’t happen, but there is now consultation on introducing a change in 2018.
2. ‘Dependent’ IT contractors pushed to become permanent
Matthew Taylor was commissioned by the UK Government to look at modern working practices and his report was published in July 2017. The Government response is due January 2018.
Currently, there are 3 types of employment; employee, self-employed and worker. Taylor recommends re-classifying worker as ‘dependent contractor’ to provide clearer boundaries between the three groups. He also suggests aligning tax law and employment status law more closely. So, an employee under one form of legislation would become an employee under another.
Why does this matter? It seems certain that any existing contractors who are classified as ‘dependent’ will pay more tax (e.g. National Insurance Contributions) – although the flip side is they will also receive certain employment rights (holiday pay, sick pay, etc?).
3. Economic uncertainty and IT complexity increases demand for contractors
There will be a degree of economic uncertainty in the UK as Brexit negotiations unfold, and this may make some organisations hesitant about taking on full time, permanent IT staff.
It’s also true the rapidly changing technology landscape is proving to be a challenge. Quite simply, how do you ensure your existing IT team are capable? Datafication, IoT, AI, automation, and blockchain are just some of the areas expanding at an exponential rate that require expertise.
IT contractors provide that expertise and can give organisations a competitive edge in challenging markets.
4. First prosecutions for illegal storage of candidate data
The General Data Protection Regulation (GDPR) comes into force on 25 May 2018 and we can expect the first prosecutions before the end of that year. Why should this matter to executives in the recruitment sector?
Recruiters hold a lot of confidential data on candidates (National Insurance number, etc) and some of the data could be classified as sensitive. This makes recruitment data an obvious choice for investigation by the Information Commissioners Office (ICO).
The ICO will look for an easy target and a household name that will grab the headlines – and an eye-watering fine that will show everyone they are serious. If recruiters are shown to be lacking in their care of candidate data it will spur the ICO to dig deeper and damage confidence in the recruitment process.
5. AI reduces human interaction with candidates
AI makes it possible for recruiters to spend less time sifting through CVs that don’t fit and more time focusing on the finalists. This has the potential to offer recruiters incredible gains when it comes to ROI and time.
It also reduces discrimination (unconscious bias) when selecting candidates. AI focuses on candidate skills rather than their demographic, race or age. As a result, talented candidates are fed through the process and the quality of screening is enhanced.
The downside is the job seeker’s experience has less human interaction and may lead to some good candidates dropping out of the process early. Candidates need to feel ‘loved’ and that you really want them to join your organisation – something an algorithm cannot do.
6. Continuous Learning gets a seat at the table
Continuous Learning has been around for some time, but I believe it will now play a significant role – particularly in sectors/departments where skills are rapidly changing (science & information technology?). It is true for both existing staff and candidates.
When it comes to learning, there should never be an end date. Gone are the days where people can rely solely on their school or university education to get them through their profession. It’s important for IT staff to continually develop their skills and knowledge, and contractors are very good at keeping up to date.
More recruiters will include fields in their Applicant Tracking System (ATS) or CRM to store details of a person’s Continuous Learning. Existing staff and candidates that demonstrate their commitment to regular IT training will get priority and Continuous Learning will be something discussed at board level.
7. Google and Microsoft fight it out to become the ‘jobs search engine’
Both Google and Microsoft have recognised that HR & Recruitment has enourmous potential. Google has already announced a new jobs search feature on its result pages and Microsoft’s purchase of possibly the largest candidate database (LinkedIn) was the first step into the arena.
Microsoft has wasted no time in developing an HR version of its Dynamics product which will no doubt be fed by data from LinkedIn directly. The next stage may be to feed the same data into their Bing search engine.
Google and Microsoft will go head to head to become the default ‘people’ search engine and the winners in this fight will be recruiters and candidates.
My prediction for recruitment trends in 2018 are that there will be higher demand for the skills offered by contractors, but fewer contractors available at the end of the year. Niche talent will be particularly hard to find. AI will speed up the process, but could make candidates feel less ‘loved’. Recruiters who do not lose sight of human interaction will have an advantage.
We will all be made very aware of the confidential nature of the candidate data we hold and ignore it at our peril with heavy fines from the ICO. The CVs we do store are likely to have more data about continuous learning, and IT candidates that can demonstrate it will rise to the top in a rapidly changing technology landscape.