Outsourcing sparks contractor pay hike

IT consultants' pay has increased by 17 per cent, fuelled by twin booms in public sector outsourcing and M&A.

The average consultant's pay increased from £41,500 in 2005 to £48,484 in 2006, according to research from SkillsMarket and the Association of Technology Staffing Companies (Atsco).

Ann Swain, chief executive of Atsco, said despite recent concerns about how much is being spent on consultants the public sector outsourcing market continues to grow.

The primary driver for this growth in spending is the scale and complexity of public sector IT programmes which cannot be managed in-house and often involve multiple consultancies working on the same project.

According to Atsco, the increase in merger and acquisition activity in the UK has also pushed demand for external consultants to record levels.

Swain said companies rarely have the internal resources to manage the hugely complex task of post-merger integration of IT systems.

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A separate piece of research by outsourcing advisory company TPI claims outsourcing contracts typically deliver 28 per cent less value than originally predicted.

Nearly half of the companies surveyed by TPI said their inexperience in managing outsourcing has hindered their success to date. More than two-fifths of respondents said they considered bringing some of their outsourced work back in-house but only one in 10 actually followed through, according to the report.