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| CURRENT SECTION :: News | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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Britain’s financial services sector has said its spending on IT in the year ahead will be “flat,” as a direct result of budgetary pressures from the deepening credit crunch. In the coming months, the sector’s capital investments plans, including those specific to technology, will be historically “very weak,” given there is no sign of the crisis abating. Its employment and profitability have fallen at the sharpest rate in five years, with one in four already having cut jobs before today - the third successive period of falling optimism. And the culling of finance jobs, like the credit squeeze, will get worse before it gets better, according to the findings, unveiled by the CBI and Pricewaterhouse Coopers yesterday. The joint-survey of 79 financial firms found a third were preparing to make staff reductions before the middle of the year, representing the worst employment outlook since 2002. Nowhere are the cuts expected to be more visible than in the banking sector, where a serious pruning of staffing levels has already seen heads roll faster than at any time since 2000. Banks’ investment intentions have also “turned negative”, the CBI said, “even for information technology,” given less inclination to expand, reach new customers and provide new services. Similarly, uncertainties in the housing market have hurt life insurance companies, which will spend more on compliance going forward, but will temper costs by cutting capital expenditure. Like life insurers, securities traders are much more pessimistic about their business, having increasing headcount for three years they will now scrutinise their capital investments. Coupled with contractions to their volume of business and stream of revenues from fees, the result will see IT spending growth decelerate in 2008, when compared to last year. Despite the market conditions and a mortgage demand slowdown, building societies emerged as “quietly confident” in their ability to fund and manage their business. Andrew Gray, PwC’s banking advisory leader, said the sector’s improved sentiment is reflected in the strength of its staffing and IT investment plans. According to the research, an unexpected boost to building societies’ profitability in this quarter means they are on track to invest much more on IT in the coming year, as well as much more on regulatory compliance. Meanwhile, the start of a boost to the profitability of general insurers, partly reflecting a growth in business and dwindling transaction costs, will help support IT spending plans. “Business volumes grew at their strongest rate since June and are expected to do so again next quarter, while the level of business was considered to be well above normal,” the research authors said. “The big fall in average transaction costs and bullish projections for IT investment in the year ahead suggest greater use of the internet to transact.” The fund management sector was the only sector in financial services to report more optimism this month than in December, and firms are continuing to expand their headcount "aggressively." However going forward, the sector said revenue growth is the biggest fear, not least because they don’t foresee the financial markets returning to “normal conditions” before the year end. Apr 1, 2008 Email this article Printer friendly page Previous Page
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