The public sector could face an IT skills shortage as contractors return to the City, according to research by contractor services provider Giant Group.
The research, which surveyed 2,000 IT contractors, showed that 21.2% work in financial services compared to 19.9% six months ago, and just 20.5% of IT contractors work within the public sector, which has remained the same for six months.
According to the Computer Weekly/SSL Survey of Appointments Data and Trends, electronics, communications and retail companies as well as the public sector have stepped up recruitment of IT staff, but recruitment is highest among banks, fin-ancial services firms and IT suppliers.
The Giant Group report said this could mean public sector organisations find it difficult to recruit new staff and secure the skills they need.
The growth of retail financial products and investment banking, combined with the need to upgrade legacy systems, is driving IT contractors out of the public sector and into the financial sector.
Jane Binner, associate director of recruitment company Computer People, said, "The financial sector is recruiting heavily. There are a lot of new developments, such as updating of technology, complete rewriting of systems and getting systems up to speed again."
Some financial services companies have been reportedly offering to raise the salaries of key staff by a third rather than lose them to rivals, Binner said.
Matthew Brown, managing director of Giant Group, said, "The City shed a lot of IT staff when the stock market fell. And many of these staff were hoovered up by the public sector as part of the e-government drive."
It will be difficult for public sector organisations to compete with financial firms on pay and benefits, but if it does not, it could face skills shortages, said Brown.
"E-government projects tend to be heavily reliant on a number of key individuals who can be hard to replace," he said.
Banks seek high-calibre candidates
Recruitment of IT in the banking sector will pick up in the first quarter of this year, creating potential shortages of skilled staff, said recruitment company Robert Walters.
Recruitment managers in banking are finding it increasingly difficult to attract and recruit high-calibre candidates within the time and budgets expected, the agency said.
Although banks will focus on recruiting permanent staff, many will have no choice but to take on more contractors or face losing ground to their competitors.
The upturn will put pressure on banks to raise salaries for contractors, but also to invest in training and staff development as a means of retaining the best staff.
More than a third of IT professionals look at training prospects when selecting employers, but research has show that many IT managers have been reducing spending on training since 2000.