Pay Jump

Pay for IT contractors in financial services has jumped 11% over the past six months, despite the downturn expected in the sector following the credit crunch, reveals research by Skills Market/Association of Technology Staffing Companies (ATSCo).

The figures create a rosy picture, with hourly rates for IT contractors working in financial services having increased from £45 to £50 per hour, its highest level in two years.

ATSCo says the figures tell a different story from the picture created by forecasts by some analysts for the financial services sector predicting that the credit crunch would lead to an immediate, wider downturn in technology spending.

Strong Demand

Ann Swain, Chief Executive, ATSCo, explains: “The post-9/11 downturn saw IT jobs cut across all areas in the City, but we are a long way from being in that position now. Strong demand for IT skills in areas such as equities and commodities trading in investment banks is helping to pick up some of the slack on the credit side.”

She also pointed out that IT departments are now not facing as much glut as they were in 2001-02 in terms of IT skills, so not much trimming has to be resorted to this time around.

She further added that retail banks were continuing with spending on e-banking and web security at a healthy rate, while regulatory spending in the form of compliance with Solvency II and IFRS Phase II has already been feeding through to demand for IT skills in the insurance sector.

May Receive a Boost

ATSCo points out that, on the contrary, IT contractors may find more opportunities and the banking sector may actually receive a further boost if the economic outlook remains uncertain, as banks may want to put a freeze on permanent hires.

According to Cititec, a staffing company specializing in supplying IT skills to the City, there has certainly been a decline in demand for IT staff in investment banks in areas like credit derivatives, but European and Asian banks, which are less exposed than US banks to sub-prime liabilities, and actively seeking people with IT skills in other business areas.

Aligning Strategies

Stephen Grant, Managing Director of Cititec, emphasizing on banks’ proclivity to align strategies says, banks are revising their trading strategies right now which is leading to an increased demand for IT business analysts whose job it is to align IT systems with changing business needs. He explains that a lot of IT investment is being channeled for beefing up trading systems on equities and commodities desks, “where more efficient IT infrastructure is needed to process higher transaction volumes.”

Still Growing

Data released by analyst Celent forecasts IT spending in the financial services sector may grow at 3.6% in 2008, compared to 4.1% in 2007.