Contractor demand is up, but for how long?Demand for contractors has steadily increased over the past 6 months, as more and more work came online. This has been countered by a reluctance to hire permanently or simply a lack of headcount to do so.This is Sourced’s Tech Shapers with our hiring predictions, opinions, and experience of the Tech hiring levers across New Zealand. As Q3 2026 passes and we look to Christmas, we look back on the year by reflecting on our predictions for this quarter. Let’s look where we are sitting on the employment curve. Also, have there been any signs of a return of employer or employee confidence and is it still an ‘employers market’ right now?What we will coverAs mentioned in our last report, by March 2026, with new budgets finalised for the new financial year, there was a lot of chatter around ‘intention,’ ‘need for growth,’ and ‘investment’. However, we had yet to see pen on paper regarding actual spend.At the time, we were still in a relentlessly sluggish economy, with shrinking budgets and reduced headcount vacancies across late 2025 – early 2026. Consequently, it was hard to imagine that any rebound would be strong.So did that chatter translate into market growth or are we still in uncertain times?This time it’s “Yes, and sort of!”Interestingly, this assumption of further hiring was about spot on.Over the past 24 – 36 months, permanent teams have been cut to the absolute bone, and are now working at or above capacity. This is driving strong demand in the contracting space. Short fill contracts are quickly turning into longer term engagements that add more capacity to already overstretched teams. Permanent hiring is still, in pockets, on the rise. However, it is very targeted (unicorn), mid career level only, and with employers more than prepared to wait. Employers are ready to secure candidates who tick all of the boxes.Tech jobs market recap: The past 12 monthsThe theme for the 12 months to April 2026 was a year of subdued hiring and very contained market growth. However, starting in October 2025, we began to see growth that carried into the first quarter of 2026. This growth was quite unexpected and came from all sectors: public, private, fixed-term, permanent, and a smaller amount from contracting. And then, once again, the market was curtailed. This time, by the global fuel crisis.Recruitment activityAnecdotally, pre fuel crisis, candidates seemed to be more available or willing to move, and many were considering multiple roles (remote and closer to home). We entered 2026 with a burst of activity as mentioned above, and all bets were on as to whether this would be the year of recovery. Demand for contractors had cooled slightly, as all moves favoured fixed-term and permanent employment. At the time employers were enjoying a depth of local talent over international sources. On top of this, mid-career recruitment was leading the way.Contract recruitmentContractors were still managing to hold on, with extensions continuing to be offered, and new contracts coming to market. They were, however, mostly short-term and public sector (short-term or fixed-term). Christchurch continued to see strong migration from Wellington, meaning more competition for available roles. Fixed-term contracts remained a temporary way to cover short-burst work without committing to contractors or permanent headcount. The usual contracting suspects – Project Management, Business Analysis, Change and Customer Support led the way, and as you’ll see below has continued to do so.International candidate marketsInternational candidates were in solid demand up until early 2024; however, demand then petered out as local supply levels lifted. 2025 and into 2026 was no different. Working Holiday Visa candidates were almost non existent, and this remains a real resource available to be tapped.Staff retentionRetention remained at an all-time high, although we knew that many candidates were disengaged in their current employment and would move if possible. Salary, benefits and work-life balance were not prominent factors in early 2026 salary discussions, despite many having not seen any significant salary improvement since COVID times.Repatriation to Australia cooled, perhaps with the realisation that challenges around cost of living, and career growth exist on both sides of the Tasman.So how did we do?In the last Tech Shapers we noted the following ‘things to watch’:Optimism in the market but wariness as we approach election timeYes – despite the election looming, market activity continues to bubble away with plenty of opportunities available, across both permanent and contract employment. With the global fuel crisis having come, (and stayed), we are continuing to see an uplift in general hiring intention.Asking salary levels starting to challenge internal team parity as candidates look to claw back CPI lossesNo – salaries remain flat, with most candidates asking for the same or a slight increase on current earnings. Salaries are not a key driver to decision making, with training, development, professional growth and career advancement key themes.Subdued contracting market as permanent headcount and longer fixed term contract recruitment outpace short term hiringNo – in fact quite the opposite. As we get closer to election year, and with permanent teams still running very lean, we are seeing more and more demand in the contracting space. If contract BA work ramps up, we’ll know we are on the return to market confidence.Yes and No, there was a run on BA opportunities at the beginning of Q3, but it stopped as quickly as it started. That is not to say there aren’t a lot of BAs in good work right now, just that the opportunities coming to market appear in fits and starts. International recruitment to stay low100% This remains almost non-existent in a job market that wants fast response and simple recruitment processes.So what happened?Fast forward 6 months, and with new budgets in place, we’re very busy in the contracting space, across all disciplines. Very short-term engagements (often as low as 6-8 weeks) are common, however some quickly grow into 3-6 month + engagements.Contracts are not specifically targeted toward transformation or improvement work; however, they are driving BAU activity, where permanent teams are over capacity, backfilling while longer term decisions are made, or simply moving work along to a point where better investment decisions can be made. Contracts are coming from all corners – public and private sector – and touching on most disciplines, with no one area being busier than another.Permanent EmploymentOn the permanent front, we are seeing a smaller number of roles coming to market, but the quality is higher. Roles are well considered, specifically targeted, and clients are prepared to wait to find candidates that tick all (unicorn) the boxes. Roles still tend to be mid career level, with little being offered at the Senior Management level. There has been a slight lean towards business systems, application development, data and AI, with little happening on the Network & Infrastructure side.Salary levels remain stable, with little appetite for counter offering.Contract EmploymentOn the contracting front, the market is very busy with a range of short term contract offerings. As above, these are not transformation or improvement projects. Budgets for 2026 remain lean, therefore contractors are being used to drive BAU activity, where permanent teams are over capacity, or backfilling while longer term permanent hiring decisions are made. They are seen as a less risky option to move work along to a point where better investment decisions can be made. Rates remain static, and largely unchanged from 2025.International TalentInternational talent coming into the country remains at a lowest with the exception of Post Study Work Visa holders, who are using Masters/PhD study options to gain a foothold into local employment. These are highly skilled candidates who bring a genuine desire to work and contribute with highly specialist skills including AI Architecture/Development.Employer Intentions6 months ago, the market was bubbling along and looking like it might take off again, and then the fuel crisis. The contracting market remained buoyant. Clients were continuing to rely on contractors to deliver work when committing to permanent headcount just wasn’t in the budget. The past 6 months has seen a good amount of activity, with green shoots of growth coming and going. We are obviously past the bottom of the curve, but getting past elections and into 2027 will be the real tell.We are looking ahead to 2027 with all indications being a return to normal activity. However, this is more likely to be buoyed by turn over and candidates moving roles than any significant market growth. Only a handful of employers are looking ahead with plans to grow, transform or innovate, with a more comment focus on ‘BAU done better’. This is likely to extend throughout 2027. The Market in a NutshellSo, to summarise the state of the current market, this is where we are: As further developments unfold, we will continue to watch the tech market and share more about how it’s shaping up. Keep an eye out for our next update to learn more about the challenges and opportunities of the current landscape. Please feel free to get in touch to discuss any of these insights further.
