Finance companies are cutting back on ITcontractors as they battle against thecredit crunch, research for Computer
Weekly has revealed.
Financial firms are delaying IT projects that will not provide
an immediate return on investment, slowing down the demand for
temporary IT staff.
Computer Weekly's SSL survey on the IT jobs market has found
that the number of finance jobs advertised for contractors fell
16.1% from 12,626 to 10,587 last quarter compared with the previous
quarter. This is the biggest drop since 2001.
The number of vacancies for permanent staff in the finance
sector fell by 6% from 38,477 to 36,280 compared with quarter three
in 2007. Vacancies could fall more sharply next year if conditions
do not improve.
"Historically, when a reduction in contractors has occurred, 12
months later there are severe reductions in permanent demand," said
George Molyneux, research director at SSL, which carried out the
survey.
The trend to cut contractors is showing signs of spreading from
financial services into other sectors, the survey shows.
Advertised contractor jobs across all sectors of the economy
fell 11.5% quarter on quarter. But this did not stop the job market
as a whole growing - there were 3.1% more vacancies in IT this year
compared with last year.
Employer groups say many companies are deferring projects that
are not urgent or that will not give an immediate return on
investment.
Ben Booth, vice-chair of Elite, a forum for IT directors, said,
"Companies are carrying on with business-growth projects that will
make money. But they are being cautious on projects where the
return on investment is less obvious.
"Typically, this will include projects such as CRM systems, or
projects to do with internal processes, where it is not so easy to
show a return on investment."
Companies are shelving decisions on major capital projects, said
Edward Truch, chair of the BCS management forum.
"It is mainly in financial services, but we are beginning to see
it in other sectors. The construction industry, for example, is
beginning to feel the impact of the credit crunch on housing."
Contractors are finding it harder to get contracts, negotiate
higher rates or get interview offers, said John Kell, policy
manager at the Professional Contractors' Group.
"Companies are starting to look at how they can save money, and
are laying off contractors who have been in a job for a long time,
because it would be cheaper to make that job permanent," said Gary
Ashworth, chairman of recruitment firm Interquest."There is still a
lot of demand, but it seems to be switching from contract to
permanent staff."
The financial services sector is cutting back the most, followed
by software houses, whose business depends on financial sector
companies. These two sectors are the biggest employers of IT
contractors.
The news came as Bank of England governor, Mervyn King, warned
that Britain faces a real risk of falling into recession.
Winners and losers in the pay stakes
IT director: +4% £90,855 to £94,557
Management/systems consultant: -1% £68,303 to
£67,793
Project manager: +1% £51,210 to £51,685
Business analyst: +1% £39,099 to £39,629
Analyst/programmer: -1% £35,101 to £34,788
Database administrator: +4% £38,540 to
£40,038
Source: Computer Weekly/SSL