• No evidence of IT jobs being shed
• Equities and commodities soaking up downturn in credit markets

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

According to the figures, hourly rates for IT contractors working in financial services increased from £45 to £50 per hour, its highest level in two years.

ATSCo says that the figures contradict forecasts by some analysts that the credit crunch would lead to an immediate, wider downturn in technology spending in the financial services sector.

Ann Swain, Chief Executive, ATSCo, comments: “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.”

She adds: “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 says: “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.

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

“Risk management and compliance are still growing areas of demand for IT skills in the City. If anything the credit crisis and the Société Générale scandal will accelerate this process, rather than put the brakes on spending.”

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.

Ann Swain points out: “Ironically, during a slowdown investment in IT is often one of the best ways for banks to increase efficiency and make cost savings elsewhere, so despite difficult trading conditions, the City ought to resist savaging IT budgets.”

All references to the research to be attributed to SkillsMarket/ATSCo

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