Finance crisis 'will hurt IT contractors'

The number of IT contractor roles in Britain's finance industry will inevitably decline amid jitters from the Northern Rock credit crisis, a leading IT jobs agency said yesterday.

A management expert also said shock waves from the lender's implosion will shake the finance jobs market for at least the next 18 months, with IT staff budgets among the hardest hit.

But global IT recruitment firm Hudson says demand for financial IT experts could slump as early as this year, causing pay rates to plateau, before they further depress into 2008. A slowdown in temporary IT jobs looks like an inevitability, the firm said.

Economic pressure on IT staff budgets would revert market status to five years ago, when contractors were mainly hired for niche roles, rather than to fill headcount.

But for now, there is no evidence that end users facing the shaken finance industry are cutting their spending on IT contractors, consultants or freelancers.

Similarly, contractors themselves aren't refusing IT roles with financers, but they are asking questions about how these companies responded to the turmoil, Hudson added.

Another IT recruitment agency, CV Screen, doesn't foresee Britain's financial woes as having a "sudden impact" on permanent or contract IT recruitment.

Its managing director, Matthew Iveson, said: "It would be naïve to think that the current credit crunch will not have some impact on the employment market.

"But the current signs are that organisations are still feeling bullish and have not put [IT] projects on hold. We are continuing to field enquiries from both existing and new clients."

Positively for the economy, management and IT consultants are yet to be bitten by Britain's banking crisis, hailed as the most embarrassing for over a decade.

Fiona Czerniawska, director of a thinktank for the Management Consultancies Association, which represents 70 per cent of the UK consulting industry, said confidence among members remains high.

"Capital markets is quite a niche segment," for UK-based consultants, she added, "much smaller than banking and insurance, so it's unlikely firms would be heavily exposed here.

"Longer-term, however, it's clearly a situation we need to keep an eye on, as it might be the first sign that the recent boom in consulting may have peaked."

An uncertain outlook also came from the Institute for the Management of Information Systems, which told Contractor UK less confidence in the financial jobs market is due to last well into next year.

Phillip Virgo, strategic advisor to IMIS, said: "The shock waves from the implosion of Northern Rock will reverberate over at least 18 months with overall employment in financial services, not just of ICT contractors, falling.

"The impact on ICT employment could be even harder because the inability of investors to get money out from internet accounts, [which] may dent confidence in online banking as a whole.

IMIS cautioned that a fuller assessment of how the credit flop and the resulting turmoil in financial markets have affected IT recruitment could be made in a few weeks' time.

And Thames Valley-based recruiter CV Screen expects its salary survey at the end of the year to be the first concrete evidence whether or not recruitment of IT staff for finance roles has suffered.

But a continuation of the turmoil, which the Bank of England has tried to ease with an injection of £10bn in funds, won't see financial organisations in a spending mood.

A recruiter that supplies IT staff to British and American financers said: "With the global credit markets being at the centre of so many financial institutions over the last four years, it will eat into profit, investment and therefore headcount."

The agency explained that a future of lower pay rates for IT contractors in Finance won't automatically mean the industry collapse is to blame.

They said the industry's IT contracting market has been "very buoyant" over the last few years, and warned it cannot keep growing at this same rate indefinitely.

Printer Friendly, PDF & Email

Sign up to our Weekly Newsletter

Keep up to date with everything in the world of contracting.


Contractor's Question

If you have a question about contracting please feel free to ask us!

Ask a question