Financial IT contractor jobs market ‘fallen off a cliff’

The financial services industry has more than just stalled as the engine of IT work, spluttering with freelance hiring freezes, ‘take it or leave’ rate cuts and even a plan to lay-off IT contractors en-masse.

In fact since June, the financial IT jobs market has “fallen off a cliff,” as the three initiatives on interim IT workers were widely deployed, for being able to cut staff costs without inflicting permanent redundancies. 

Banks and other financial outfits have also quietly prioritised attrition, a London-based screening firm added, so HR teams do not intend to replace IT staff who leave voluntarily or under the initiatives.

UBS is a case in point: updating its £1.5bn cost-reduction plan, which is in place until 2013, the Swiss bank last week said that a mix of redundancies and attrition would eliminate 3,500 positions.

A UBS spokeswoman declined to be drawn on the impact on IT staff – which extends to a 10% pay cut for all IT contractors in its UK operations, assuming they want to keep their jobs.

Reflected Alexandra Kelly, founder of Powerchex, which screens IT contractors for financial jobs: “It is definitely likely that more financers will follow [suit] now that one big player has cut IT contractor pay.

“Some financial organisations are looking at costs they never even considered before…on top of [a more conventional] hiring freeze on temporary IT people, which is in addition to leavers’ [IT] posts not being refilled.”

According to the firm, the stock of IT contracts that financial services handed out in July plummeted by more than 80%, with a further slip in August which, Ms Kelly cautioned yesterday, is still ongoing.

“IT contractor recruitment now – the first week of September, has been exactly half the level it was in June,” she said. “It was quite strong then, but since June IT contractor hiring has fallen off a cliff.”

A similarly marked deterioration has been seen by SQ Computer Personnel, an IT contractor jobs agency serving London and the South East, albeit over a longer timeline.

“Cost-saving initiatives have resulted in a gradual month by month reduction of contractor numbers within the financial services industry in the last two quarters”, the agency told CUK.

“[Overall], contractor billings within the industry over the last three months are roughly down 15% compared with the same period in 2007.”  

This is partly because, in addition to layoffs earlier this year, household financial names have imposed temporary hiring freezes as they want to re-scope projects around lower headcount to improve their bottom line.

However David Ward, a director at SQ, identified another trigger – and one which he blamed for a “significant drop” in financial IT contractor openings last month.

“[Gradually] financial services companies have looked to reduce the number of IT contractors and where possible replace them with permanent headcount.

“[But it was] the problems in the Eurozone and the US in August [that] saw a dramatic spike in the number of redundancies and the number of IT contractors being released”, he said. 

Anecdotal evidence from a staffing captain who deals with HR directors at banks and financial institutions indicates that such culls of IT contractors are indeed on the agenda.

Pointing to an American-owned investment management giant trading out of London, the captain said up to 40% of its IT contractors were unknowingly facing termination.

Business according a company insider is brisk and its order pipeline is healthy, yet losing hundreds of IT contractors has been internally floated to reduce costs. A formal announcement is expected this week.

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