Computer Contracting: Recovery measured in small bytes: Computer recruitment agencies can see light at the end of the tunnel - and the future, says Lynne Curry

COMPUTER recruitment agencies claim no knowledge of the elusive science of green shoots, but in matters of slump and revival see themselves at the sharpest end. If Norman Lamont had been looking for a barometer instead of a botanical simile, they say, he could have done worse than to turn to them first.

In a working climate dominated by the computer, recruitment agencies are among the first to see the slimming begin and the fat start to go back on. Companies specialising in the 'luxury' trades and professions such as artwork and design are particularly sensitive to belt-tightening.

That is why there is a glimmer of good news for the Treasury from these specialist body-shops. But they see a very different working world emerging from the trough to the one that went into it.

Staff jobs, once the norm, will shrink in number. Hand-picking staff with particular skills for particular tasks is more likely to become the practice. The invasion of the computer into the white-collar workplace will leave less work to go round.

According to one specialist agent, Jenni Reid, whose Adlink agency places artists, the Government should be addressing ways of distributing available work more thinly among more people.

'Employers need encouragement to take on part-time staff,' she says, 'for example, by cutting National Insurance rates for staff who work between 20 and 25 hours. Why can't people work less? New technology has caused so many people to be out of work. To kick-start the economy we need to have more people earning a bit less money.'

Ms Reid says there have been improvements over the past six months among her clients, mainly advertising agencies and design studios. This sector has been massively hit by the recession. Up to 60 per cent are believed to have foundered.

Martin Grogan, who founded a design consultancy 11 years ago, says he owes his survival to a sharp accountant who ordered drastic slimming measures - among them, the shedding of all permanent staff. 'We were quite large and almost didn't survive. We decided to run everything on freelance work. My accountant calculated that instead of employing one person at pounds 25,000 that money could be spent on buying freelance time, which is calculated on hours actually worked. When we're full strength we have five freelances - we try to keep to about four regulars who know the projects and customers.'

Mr Grogan says freelances (the same people are called contractors in the business sector) are more motivated because they are running their own business within the client's business, and are keen to keep the client happy to work for them again. Initially it is more expensive than employing an artist on staff. His company pays between pounds 15 and pounds 18 an hour, the equivalent of an annual salary of about pounds 37,000, but he saves on holiday pay, sick pay, National Insurance contributions and the associated administration.

Eddie Grafton, who established Grafton and Partners 12 years ago, runs his company on 'resident freelances' who appreciate the seasonal idiosyncrasies of one of his backbone markets, holiday brochures, and disappear during slack periods.

Computers have taken over his Battersea office. 'We now use Apple Mac for 95 per cent of our work,' he says. 'Three years ago, for the order we're doing now, we would have had two permanent staff and seven freelances. We now do more work with three freelances. The amount we spend on studio supplies has gone down by 95 per cent. Graphic supply companies have swung with the trend and are now offering computer disks and programs when they used to offer pens and pencils.'

Doug Woodward, managing director of the Span Consultancy, a major supplier of contractors to blue chip companies, has noticed signs of revival, just as he noticed portents of the recession. 'If the Chancellor had talked to employment agencies who handle temporary staff they could have told him well before the Treasury that there was a recession on.'

The upturn, however, has been limited to temporary staff - a trend he sees continuing. 'People will take contractors rather than go down the expensive road of recruitment. The market has changed. Companies want more specific skills and can afford to be fairly choosy as well.'

Mercury Communications uses high numbers of temporary staff. When they work long-term, the company pays them and the supplying agency much more than it would to a staff employee. Temporary staff are used mostly for jobs requiring specific skills while Mercury recruited and trained its own operators, or they worked on short-term projects. 'We want numerical and technical flexibility,' a spokeswoman said. 'This is such a fast-moving industry that there is sometimes a danger of skills

obsolescence.'

Clients who use contract staff praise their up-to-the-minute expertise, their value for money, their reluctance to start working days with coffee and the morning papers and the supreme advantage that they are their own responsibility.

The Corps Business, an Apple Mac recruitment specialist, has just opened a second office in Edinburgh, anticipating a revival in the city's design companies, advertising agencies and banks.

Anne Scranney, a consultant based in the London office, says creative companies are a good economic indicator and temporary staff an ideal way of answering demand without overloading the establishment. 'These people are there for when you're busy. Recruiting permanent staff for a rush period could leave them idle for the rest of the year.'

(Photograph omitted)