Market & Sourcing

2023 day rates for IT consultants to rise

by Jeremy Smith

The demand for IT consultants is high, the supply is limited. As a result, prices for consultants in infrastructure and application development are rising rapidly. The retreat of the pandemic is not easing the market either.

The Covid-19 dip in daily rates for IT consultants was not sustainable. In the meantime, prices for IT consultants are aiming for new record highs. In our survey on the IT Agenda 2023, participants already expected this trend: on average, they assumed an increase in day rates of 6.11 per cent for 2023. This was the highest value in the survey, but the expected growth in fees for IT freelancers and in salaries for internal IT staff ranked only slightly behind.

Daily rates for consultants in software development

Higher day rates have already begun to emerge during 2022 in the market data we regularly collect by analysing existing sourcing contracts. In late summer, we analysed the daily rates for software developers in Europe. Here, the increase was between three and six per cent, with the lowest skill level showing the highest growth. The trend is primarily due to the continuing high demand for IT solutions and the requirements of ongoing projects.

Daily rates for IT infrastructure consultants

In 2023, price increases will come as a result of inflation. This can be seen in the IT infrastructure sector, among others (see top chart). Here, the increase compared to the previous year is five to eight percent, with the highest rise in the intermediate skill level. In both calculations - IT infrastructure and application development - our evaluation focuses on daily rates for consultants from outsourcing service providers. Fees for IT freelancers are analysed in a separate cluster.

How can day rates for external IT consultants be reduced?

The demand for external support will not diminish. Coupled with rising daily rates, this regularly leads to higher expenses in IT. But there are many ways to optimise the price-performance ratio of IT consultants. In our blog, we describe a total of six approaches to reducing consultant day rates:

  1. long-term agreements
  2. fixed purchase quantities
  3. on-the-job training
  4. calculation of expenses vs. flat rates
  5. supplier consolidation
  6. sensitive handling of IT skills in demand
To the Metrics Blog

Reducing IT consultants' day rates 1: Long-term agreements, fixed purchase quantities and on-the-job training

Reducing IT consultants' day rates 2: Calculating expenses vs. flat rates, consolidating suppliers and dealing sensitively with sought-after IT skills

Jeremy Smith

Jeremy Smith

Jeremy is responsible for UK, Benelux & Northern Europe and has been in the IT benchmarking arena for over 25 years. He previously received bench­marking exercises as an end user and delivered benchmarking exercises as a project manager.