What do the UK and Australian ICT Contracting trends tell us about New Zealand in 2024?

The UK and Australian ICT Markets are good predictors of our own trends.

As you may know, my major area of interest is in the IT contracting space. I’ve been away just recently in the UK and Australia, and I took the opportunity to look at their respective markets when it comes to IT contracting and to see what shifts they’re experiencing.

Just going back a little.

I have always used the Australian market as a bell weather. In a previous post I used the 2023 Sydney market to predict a tightening of contract requirements here. As the former Auckland General Manager of two of Australia’s largest IT Recruitment companies I know that, as sure as night follows day, the NZ job market will track the Aussie market a couple of months behind, so it’s always interesting to see what our Australian cousins are up to.

The Similarities

The UK, Australia and New Zealand have all endured a tough last 18 months financially with high inflation, high interest rates and cost of living increases outstripping wage rises. Unemployment has been creeping up. And whilst there are some major influences specific to each nation there’s enough similarities to make some comparisons in our respective markets.  So, where are our cousins heading in the next 6-12 months and what trends are likely to translate to us?

The UK

Let’s take a look at the UK. The signs there are that the IT contract market reached the bottom in March 2024 and there are signs of a revival. No one is expecting it to bounce straight back to the peaks of 2022 as clients are still proceeding with caution however the green shoots are definitely there.

Looking at a report from KPMG, contractor demand has fallen since August 2023 but April 2024 signalled a small but significant positive. This is underpinned with business optimism rising. In the report, when asked the reasons for the increased pipeline of tech projects, the most common answers from clients were:

  • “We’ve put this off, but it now must be done,” and;
  • “We’ve had budget approved”.

That sounds familiar.

But even so, in the UK business confidence is not considered strong just yet.  A couple of key indicators of this are that the turnaround timeframe onboarding a contractor, from requirement to contract offer is 140% longer than in 2022.  As you’ll remember, back then organistions had to move fast to snap up a contract resource or know they were going to miss out. At this point in time managers have the luxury of taking longer to assess and decide on a candidate.

In the same report, contract rates are interesting. Rates hit a high in 2022 and did drop from August 2023 onwards. But, despite a sluggish market, rates haven’t dropped lower in 2024, and that’s because when there is a demand for a contract resource the emphasis it, as it should be, on the quality of the services rather than the price. Good operators will always know their worth and will meet the market valuation but not undercut it.

There are also some other influences in the UK that indicate they’re ready to bounce back. They’ve just had their general election with a strong majority for a labour government ousting the incumbent conservatives.

Labour will be looking to foster a more cordial relationship with the UK’s biggest trading partner, Europe, and roll back some of the confrontational Brexit strategies that have seen a reduction in GDP.

They’ll also be looking at a tight spending budget but investing in public services, particularly the NHS. They’ll be pledging not to raise taxes. The aim is to keep inflation low which will subsequently reduce interest rates.

So very specific to the UK but I’ll discuss why this is significant to New Zealand in a moment.


And now to Australia. Like the rest of the world the post pandemic boom meant that organisations large and small geared up for a digital explosion, but less buoyant market conditions have seen them right sizing. Right sizing seems to be the buzzword across the ditch, nobody wants to be seen as downsizing – there’s obviously a subtle difference. This is seen as more a boom phase correcting and stabilising itself. So, glass half full in Australia.

Rightsizing has naturally led to a decrease in contracting requirements and subsequently reduced daily rates. But the Australian economy is remarkably robust, avoiding a recession in 2023 with the Reserve Bank managing it in 2024 to get it just slightly growing. It grew by 0.1% in the last quarter. Inflation is expected to be down to the target 2-3% this year and with that interest rates cuts are forecast by top economists.

Right now, Australia’s tech leaders are concerned about the need for technology workers to increase their digital capabilities with data and analytics and cyber security top of the agenda. They know that this period of lower demand is coming to an end and are being proactive about it before demand begins to outstrip supply again.  Some sectors are experiencing greater activity that others, most notably local government, health, infrastructure, utilities and mining.

New Zealand

So, what would I predict for the contracting workforce in New Zealand for the second half of 2024 and into 2025.

Undoubtably it’s slow market now but with patchy areas of activity.  According to the Auckland Business chamber, confidence is low, with 65% of business’ surveyed having a negative outlook.

But as that’s a survey across a wide range of different businesses that doesn’t necessarily reflect the Contract ICT market. For one, higher unemployment numbers are more particularly affecting younger workers and the unskilled and is exacerbated by strong immigration numbers. There is a strong immigration drive in the healthcare sector, construction and infrastructure, the transport sector and skilled tradespeople, all factors not affecting our sector.

According to a Gartner report NZ CIO’s are looking to increase their spend exactly the same as the UK, in cyber security, cloud platforms and business intelligence and analytics. The key business drivers are:

#1 excellence in customer experience

#2 Ensuring compliancy and minimising risk and

#3 Improving operating margins

To help them achieve these goals the top game changing technology to implement will be artificial intelligence/ machine learning and Generative AI.

Like the UK, a change of government is forcing widespread change. Initially this hit the contracting sector hard, particularly in Wellington, as public sector job losses were severe. Strong fiscal policy however is reigning inflation in fast, and the latest figures have had economists such as Stephen Toplis, the BNZ head of research, saying inflation is beaten, and called for the central bank to cut rates much sooner than projected.

The overall consensus is that we have hit the bottom of the curve, and it is time to release some of the handbrakes used to slow the previously racing economy. If we follow the Australian path, as we have always done in the past, there will be a steady increase in contracting opportunities towards the end of the year.


The NZ economy is following other global economies and returning to expected norms.

Budgets are being approved for previously delayed projects.

Key business drivers – improved customer experience, compliancy and improved operating margins are common to all ICT leaders.

Similar global markets are predicting we have hit the bottom of the curve.

My next task is to take a straw poll locally with key ICT leaders in New Zealand and see how they are seeing the market. I’ll report back on that soon.

If you’d like to contribute and be part of the conversation, please drop me an email at ashley@logicalconsulting.co.nz

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