As government departments strive to reduce their reliance on contractors and focus on increasing their internal headcount, contractors must adapt. Photo: Michelle Kroll.
As Parliament sits again, there’s renewed attention on the growing reliance on external contractors and consultants within government departments. While political sentiment leans toward simply reducing external labour usage, the reality is more complex.
The government is struggling to meet staffing demands internally, especially in key areas such as defence and technology. Meanwhile, the contractor market faces new challenges, including tighter budgets, fewer opportunities and greater competition.
With government departments striving to reduce their reliance on contractors and focus on increasing their internal headcount, many agencies are advertising contracted roles to assess whether there is a cheaper, internal alternative before recontracting current contractors.
Contractors are often invited to apply for their own role, but this can mean a significant pay cut, sometimes as high as $100,000 in take-home pay. This creates an environment of uncertainty, not just for contractors but also for the departments themselves. Mid-project adjustments to a key team member can delay project timelines, leading to strained relationships and disrupted deliverables.
The evolving market means contractors must shift their approach to securing work. Contractors need to focus on building their personal brand and show a consistent track record of how they’ve added value to their clients. Demonstrating their ability to ensure project success, especially under tight deadlines and budget constraints, is critical to securing the next opportunity.
For contractors to stand out, they need to develop a portfolio of recent case studies that showcase their contributions to successful projects. Highlighting their role as the linchpin in the completion of major initiatives provides potential clients with evidence that the contractor will bring value beyond just completing tasks. Being able to say, “I was the key to delivering that project on time and on budget” becomes more critical than ever.
Really Awesome People head of recruitment Guy Earnshaw says contractors must become more strategic, building relationships with recruiters and staying actively engaged in finding their next opportunity. Photo: Michelle Kroll.
Contractors are also becoming more active in seeking new opportunities, directly engaging with recruiters and potential clients, often taking an equal or more proactive role in finding their next contract. They need to be aware of how the industry works, from understanding panels and procurement processes to knowing the right networks to tap into.
As government clients increasingly shift away from smaller firms in favour of mid-tier Managed Service Providers (MSPs), contractors are also feeling the effects here.
Mid-tier MSPs often handle large projects and then subcontract portions of the work to smaller firms or individual contractors. This three-tiered system, involving a government client, MSP, and contractor, can result in the contractor receiving a smaller take-home package, as the MSP takes a portion of the payment.
While this may make it easier for government agencies to manage a large project, it also means the contractor gets squeezed in the process. Not only does this affect the contractor’s pay, but it can also impact their sense of control over the project. Clients can end up paying a significant premium for the service, while the contractors, working multiple levels deep in the supply chain, have less control over the outcome.
However, MSPs can bring stability to contractors who are looking for steady work through large, ongoing projects. For contractors willing to accept a smaller take-home pay, this can present opportunities to secure long-term contracts, which might be appealing in a tightening job market.
Contractors must become more strategic, building relationships with recruiters and staying actively engaged in finding their next opportunity. As government departments try to balance budget constraints and project demands, contractors who position themselves as indispensable and proactive will be in the best position to thrive.
In this uncertain environment, adaptability, visibility, and strategic thinking will separate the successful contractors from those left struggling to secure their next contract.
With the government undertaking the productivity roundtable this week, it would be good to consider how best to engage and work with all the organisations that deliver government services.
Guy Earnshaw is Head of Recruitment at Really Awesome People.
