Demand for IT professionals in financial services is starting to drop, as the credit crunch causes turmoil in the markets.
Computer Weekly's quarterly survey of the IT jobs market, conducted by SSL, reveals that the number of jobs advertised for IT professionals in the financial markets in the final quarter of 2007 fell by 6% on the previous quarter, from 38,477 to 36,085. Demand for contract staff fell by 1.5%.
The drop is in sharp contrast to rising demand elsewhere in the economy, which has seen the overall number of jobs advertised for IT professionals increase by 5.2%, from 141,669 to 148,993 in the last quarter of 2007.
Recruiters and analysts say there is an "air of prudence" in the City, with companies delaying non-essential IT projects and proceeding cautiously on recruitment decisions.
"Investment banks are tightening their belts but there is still demand in other areas. Capital has really dried up, so we are seeing fairly prudent cutbacks, and overall the contract market is slowing," said Steve Durbin, head of technology practice at recruitment firm Harvey Nash.
The Computer Weekly/SSL survey suggests that the jobs market in the finance industry is in the early stages of a downturn. Although companies are not cancelling projects, they are putting new projects on hold.
There is a degree of caution, said Ben Booth, vice-chair of the BCS Elite IT directors group.
"People are being careful because they are not sure what is on the horizon. They are taking stock, and if they can delay recruiting, they will," he said.
George Molyneux, research director at SSL, said that as City firms cut their headcounts, there would be less need for IT support staff.
Ralph Silva, analyst at TowerGroup, said the growth in outsourcing had reduced demand for IT staff in the City. "Outsourcing is increasing, so fewer internal staff are required. Most suppliers today offer services such as business process outsourcing, which banks want," he said.
At the same time, financial firms are finding it difficult to recruit IT staff with the right range of skills.
"There are not sufficient numbers of people coming through our educational system that either want to work for banks or have the fundamental qualifications required," said Silva.
PJ Di Giammarino, chief executive at financial services think tank JWG-IT, said, "There are fewer opportunities in general because of the market turmoil, and the chances of moving to a bigger job are limited."
Durbin predicted the downturn would continue for much of 2008. He said, "There is an overall air of prudence, and I think this will continue. The chances of a quick fix are pretty remote."