The UK recession: Impact on the IT sector

The credit crunch has taken its time to spread beyond financial services out into the rest of the UK IT sector, but the latest research shows all areas are being hit hard.

As the UK officially enters a recession, the latest research shows that its effects have spread into the IT recruitment market.

The UK’s gross domestic product (GDP) shrank 0.6% in the third quarter of 2008, and 1.5% in the fourth quarter – the biggest fall since 1980.

The economic gloom took its time to spread beyond financial services out into the rest of the UK IT sector, but most areas are now being hit hard.

The bad news

The SSL/Computer Weekly survey shows the average number of vacancies in the sector fell 24.3% between quarter 3 and quarter 4 of 2008, from 129,672 to 98,173, with a resulting stagnation in advertised salary growth.

Although financial services and London are leading the decline, other areas and sectors are now seeing big falls in advertised vacancies. Financial services advertised 32.1% fewer IT vacancies in quarter 4 of 2008 than quarter 3. During 2008, IT job vacancies in London fell 45%.

The survey also shows that recruitment is down by 27.5% in the north east of England, 22.1% in the south, 14% in Scotland and Northern Ireland and 21.4% in the west midlands.

George Molyneaux, director of Salary Services Limited which carries out the research, says the average 24.3% fall was "worse than that seen in 2001." He adds, "It is quite possible that recruitment will virtually dry up during the next quarter."



The good news

But it is not all bad news, with recruiters pointing to silver linings and rays of hope. Matt Smith, director of UK regions at Harvey Nash, says IT directors and staff have done a "great job" over the last ten years of improving IT's stature in the business.

"It really is not all doom and gloom," he says. "In 2001 after the bubble burst, IT was the bad guy. It was seen as a cost to the business, not a strategic advantage. IT staff have done a great job at raising its profile. It is no longer seen as a cost."

Michael Bennett, director at Rethink Recruitment, has some words of comfort for IT contractors. The SSL research shows contract vacancies have fallen 26.9% between quarters 3 and 4 last year, but Bennett says this is partly because employers no longer need to advertise for them.

"The contractor business is pretty strong because companies want people on short-term contracts. The lack of ads does not surprise me because you do not need to advertise to find people at the moment."

Advice for people facing redundancy

  • Steve Palmer, head of IT at Hillingdon Council in London, says staff should look at short-term project work, and make sure they keep their skills up to date, taking advantage of any available support.
  • Michael Bennet, director at Rethink Recruitment, says staff must be persistent - register with plenty of agencies, look at the job boards regularly and contact companies directly. He says other economies, such as Dubai, are less affected by the recession than the UK.
  • Matt Smith, of recruiters Harvey Nash, advises staff to "leverage" relationships with recruitment consultants, with peers, or with people they have already worked for. "Use Linkedin and make sure your CV is up to date, and do not get disheartened," he said. "It is about using the network you have and being in the thought periphery of decision-makers."

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