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Demand for financial IT contractors from the private sector plummeted last month to its lowest level in seven years, the latest industry index suggests. The Computer Weekly/SSL survey found that the number of finance jobs advertised for contractors fell by 16.1%, representing the biggest drop in demand since 2001. This trend of cutting IT contractor hires shows the potential to extend beyond financial services, the pollsters added, reporting their findings from the last quarter. This concern of a recruitment slump in financial IT services spreading into adjoining markets staffed by contractors echoes a technology analyst’s prediction last month . Today in major areas of financial services, the turmoil has resulted in reduced daily rates; fewer contract extensions, less offers and fewer pursuant agents, recruitment sources said. “ Banks and financial services outfits cutting IT contractor hires should be no surprise to anybody because the sector is in trouble. They are trying to re-adjust to the new economic circumstances,” said David Smith, vice-chairman of the REC’s IT and Comms group. He believes the freelance IT jobs market is not “all doom and gloom” but says banks, financial firms and software houses dependent on orders from financial firms would be less active. For IT contractors in financial services, the fear of being near or stuck to the bench is undoubtedly today’s hot topic, according to John Kell, policy officer at the PCG. “We are seeing a lot of reports on our forums of interviews being harder to come by, and contractors being more inclined to stick with their current client and aim for a renewal, rather than chase a higher rate elsewhere. “It's certainly the case in financial services,” he said, “the picture for other contractors is not so clear.” When their contracts are up for renewal, IT freelancers have seen signs of the credit crisis, regardless of whether they work in financial services, said Steve Pragnell of PM3 Consulting, a project management recruiter. “Companies are re-evaluating their 2008 IT budgets and cost is becoming a much more fiercely interrogated factor of business cases than it was during the ‘good times.’ “[Our] new business is slightly down on last year, across the board though not just in the finance and technology industries. “What is a more worrying trend is the trend of clients not extending contracts, offering unfavourable extensions, such as just one month, or leaving it so late that freelancers are moving on of their own devices.” This time last year, Mr Pragnell reflected how IT contract extensions were being arranged “much more promptly” and with more “contractor-friendly terms” than they are today. If business conditions worsen, he predicted the number of IT contractors on corporations’ books will be reduced, as personnel approvals for projects become tighter and daily pay rates are pressured. In line with warnings from IT consultant provider Skillsfair, PM3 hinted that the economic woes have a two-fold impact: the client will use them to justify a rate reduction and the worker will see them as reason enough not to negotiate. “The sheer competition for [project manager] contracts will also drive [their pay] rates lower,” Mr Pragnell said. “We recently had over 200 applications for a £300 per day PMO role. This is really at the bottom of the range we hire, yet we got a good number of experienced project managers pitching for the work. “As the numbers of contractors looking for work grows, inevitably individuals will start to cut their rate expectations so that their CV gets to the top of pile sooner.” If business conditions worsen, IT contractors should act to ensure their skills are among the most in demand by up-skilling or complementing their specialism, Mr Smith advised. However, as a managing director of two games and software development recruiters, he said some creative IT contractors would be forgiven for thinking the credit crunch is yet to bite. “My area of computer games development is not alone, as colleagues in general IT & Communications have also confirmed that, from an agency perspective, we have probably never been busier with IT contracting. “In my niche, IT contracting is growing at the expense of permanent IT jobs. Partly [in] the swiftly moving economy clients need to be more nimble with their staff resources.” His advice to new contractors in his sectors pondering how much to charge is the same today as it was before the credit crunch started in August last year: add between 20-30% onto the permanent pay rate. Yet for those IT professionals working as freelance project managers, a wrong decision on the pricing of their services could be the difference between bench-sitting and earning. Of organisations, PM3 asked: “Why [would they] continue to pay a project manager £500-£600 per day when the market has to offer equally suitable and experienced PMs for £400?” May 21, 2008 Email this article Printer friendly page Previous Page
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