Salaries for IT and permanent staff have risen by as much as 15% over the past two quarters, as companies upgrade legacy systems to meet the demands of regulations such as Basel 2 and new communications standards.
The upturn has been seen across the UK over the past two quarters, during which the number of jobs advertised for IT professionals in the finance sector rose by 32%, from 3,167 to 4,172.
Anne Swain, chief executive of the Association of Technology Staffing Companies, said, "Over the past six months permanent recruitment has gone up tidily and contract more so. Finance has always been the highest-paid sector but pay is going up. Some of the financial institutions are paying above the market rate because they are desperate."
Several investment banks are recruiting heavily in London and paying more than the market rate for people with strong business and IT skills. Among these is Barclays Capital, which said it plans to take on between 400 and 600 IT staff during the next 12 to 18 months.
Sean Zimdahl, managing director of Aston Carter, which specialises in supplying IT staff to investment banks, said, "We have seen a dramatic ramp up over the past two quarters. The headcount has been released. Counter-offers from firms that want to keep their staff are increasing. Firms are looking very bullish about the next eight to 12 months."
IT professionals with business skills, such as knowledge of derivatives and fixed-income bonds, gained through three to five years' experience, are commanding premium rates.
C++, C#, .net skills along with business analysts and project managers are in high demand as companies kick-start IT projects that were left on the back burner during the downturn.
"Good quality candidates are hard to find," said Zimdahl. "The banks have most definitely upped the service they require. A lot of banks have increased their permanent rate because the need is urgent. Some banks have increased their rates by 20% to 30%."
Mark Holland, senior manager at financial services consultancy KPMG, said many financial firms are upgrading legacy systems to meet demand from regulators. They are also adopting elec-tronic communications protocols such as Financial Information Exchange, to improve links with other firms.