Market & Sourcing
IT Consultants 2024 - Record daily rates
by David Warren
External IT consultants are becoming increasingly expensive. Daily rates in IT infrastructure will continue to rise in 2024 across all skill levels. However, the growth will slow somewhat after a strong rise in recent years. There are also ways to limit the increase.
Daily rates for external consultants in IT infrastructure will set new records in 2024. The average daily rate for IT systems engineers and consultants in Europe will exceed €1,000 for the first time. This means prices will continue to rise after the COVID-19 dip in 2021. However, 2024 growth rates will be slightly lower than in previous years, ranging from 4.4 per cent to 4.9 per cent, depending on skill level. Compared to 2021, the daily rate for an on-site supporter has now increased by 19%.
The rise is somewhat steeper when looking at figures for the Swiss market only. Here, growth rates are between 4.7 percent and 5.7 percent - again from a higher starting point. In 2024, the average daily rate for a project manager or IT architect will be CHF 2,375 (about 2,500 €). This represents an increase of 23 percent since 2021.
IT costs on the rise
At least the average increase in Europe is not quite as high as IT managers had feared. In our late autumn survey on the IT Agenda 2024, we asked about expected cost increases. Respondents estimated external consultancy costs would rise by 7.07 per cent in 2024. By comparison, IT salaries and freelancers' daily rates are expected to increase by less than six per cent. The lowest estimated increase (5.15 per cent) is for IT infrastructure, with applications, as last year, leading the way with a rise in costs of 8.31 per cent.
Daily rates for software consultants
By autumn 2023, external software experts had already set new records for day rates. This applies to all skill and experience levels. The year-on-year increase ranged from 4.1% at the lowest skill level to 7.3% for developers with special skills. From 2020 to 2023, their daily rates increased by 11.7% (Level 1), 15.5% and 14.7% (Level 3) respectively. This trend is mainly due to the high demand for IT applications and requirements in ongoing projects, as well as the inflation rate.
Containing costs for IT consultants
In both areas - IT infrastructure and application development - our assessment focuses on daily rates for consultants from outsourcing service providers. Each year, Metrics analyses a large number of sourcing contracts signed in Europe. Day rates of IT freelancers were not taken into account.
Despite the challenging economic situation, we do not expect a significant decline in demand for external IT consultants, even if there are some adjustments to purchase quantities along with financial renegotiations. Given the increasing complexity and frequency of innovation in IT, it is becoming more and more difficult to have all skills and resources in-house.
However, the price/performance ratio of IT consultants can be optimised. In our blog, we describe different approaches to controlling consultants' day rates:
- long-term contracts
- fixed purchase quantities
- training on the job
- calculation of expenses vs. flat rate
- supplier consolidation
- sensitive handling of IT skills in demand