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Financial Services IT contractors see rate hike despite credit crunch fears

Published on Feb 1, 2008 | | Contract Rate Checker

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Despite the media frenzy following the "credit crunch", IT contractors working in the financial services sector have seen an 11% rise in contract rates over the past six months, according to new research.

According to the latest Skillsmarket/ATSCo survey, financial services contractor hourly rates increased from £45 to £55 (the highest level in 2 years).

Ann Swain, Chief Executive, ATSCo, said:

"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."

"IT departments are not as over-staffed as they were in 2001-02 in terms of IT skills, so there is far less fat to trim this time around."

"Retail banks are continuing to spend on e-banking and web security at a healthy rate, and regulatory spending in the form of compliance with Solvency II and IFRS Phase II is already feeding through to demand for IT skills in the insurance sector."

ATSCo points out that demand for IT contractors in the banking sector may actually receive a further boost if the economic outlook remains uncertain.

Ann Swain said: "Banks may look to mitigate employment costs by putting a freeze on permanent hires, which often creates more opportunities for contract workers."

According to Cititec, a staffing company specialising in supplying IT skills to the City, there has 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, are still looking to looking to increase IT skills in other business areas.

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