Fall in number of London IT jobs

The number of new IT jobs in the UK's financial capital is being pinched by the credit crisis, in a sure sign that competition for the highest value work will intensify.



Seemingly overly reliant on private sector cash, many banks and financial institutions in London and the South East have reacted to the crisis by freezing IT recruitment levels.



Explaining its claims, agents at ReThink Recruitment said the city and its region created two-thirds of all IT jobs in Britain in 2006, 20 months before the credit crunch hit.



Their database shows that whereas the home of financial services once drove IT job creation unchallenged, it now creates 58% of IT jobs, down from 66% two years ago.



In contrast, regions less populated by financers - the South West; West Midlands and North West each increased their market share of new IT jobs over the same period.



ReThink, with offices in Birmingham, Manchester, Bristol, Leeds and London, said the regions were clearly being less adversely affected by the fallout from the banking crisis.



A Midlands-based IT recruiter testified, by saying demand for financial and non-financial IT contractors was holding up, and rates were steady though reviews were incoming.



"Recent events are bound to have dented confidence," said Jon Butterfield, a director at ReThink, pointing to upheaval in financial markets and state bail outs.



"Organisations may be reappraising IT spending, but the first casualty of cost-constrained IT budgets is often spending with vendors."



Like IT workers, he said that offshore providers of IT services to UK-based companies could therefore face tougher renegotiations upon expiry of their current contract.



IT directors were also likely to rethink the optimistic budgets they committed to in the first quarter this year, the agent said, when twice as many planned increases than planned cuts.



But the gloom is avoidable: the public sector has increased its reliance on IT skills since the last downturn, "which should provide some ballast to the jobs market," Mr Butterfield hoped.



A London-based private sector recruiter also said a UK oil giant had increased its intake of engineering and IT contractors, indicating the power and energy sectors remain sheltered from the financial fallout.



Bernie Potton, managing director of SQ Computer Personnel, added: "We [also] do a lot of work in the unit trust and investment management sectors.



"We have not yet noticed a downturn, in fact we [have] record contractor numbers out [there], but I guess it is inevitable that the economic downturn will hit us eventually."



So in the City, there is yet to be a decline in IT jobs in all sectors of financial services, ReThink confirmed, in line with optimism about insurers, though it is marked in front and middle office roles.



"Despite many investment banks cutting jobs in some areas, in others, such as compliance and risk management, they are boosting IT staff numbers as they develop systems to mitigate risks in volatile markets," the agent said.



Consolidation in financial services was also billed as creating a need for IT specialists to integrate disparate systems, though the pace of mergers and acquisitions has

slowed dramatically in recent weeks.



Of the jobs that are being created by financial services, temporary IT staff, such as contractors, are the best placed candidates to secure them, according to global recruitment firm Hudson.



Paul Elworthy, its director of financial IT recruitment, explained: "The level of contract recruitment has reduced but not stopped, naturally much of this is within financial services but we have not seen a dramatic reduction in any one area.



"What we are experiencing is a greater level of contractor recruitment than permanent recruitment at the moment, which is partly due to it being Q4, but also more reticence to hire permanent staff.



"In this market, contractors are seen as a great solution to resourcing needs, providing quick fixes and an understanding that they will be needed for a set amount of time, or until permanent hires can be approved."