Growth in demand for IT professionals has declined for the first time in two years, and there are indications that the jobs market may be feeling the impact of software development work moving offshore, according to the latest Computer Weekly/SSL Quarterly Survey of Appointments Data and Trends.
The number of jobs advertised online fell by 6% during the second half of 2005 - the first decline since October 2003 - the survey revealed. At the same time, advertised salaries have fallen in more than half of the job categories monitored by SSL over the past six months.
The study confirmed the development of a two-speed economy in IT skills, in which demand for basic skills in the UK is waning, while IT professionals with business skills are at a premium.
"Except for those who have got skills that are in short supply, such as project management, business understanding and multimedia skills, we will see a permanent shrinking in demand. If it can be moved offshore it is moved offshore," said Philip Virgo, strategic adviser at the Institute for the Management of Information Systems.
More IT employers are outsourcing basic development and programming work overseas, reducing demand for these skills in the UK, said Anne Swain, chief executive of the Association of Technology Staffing Companies.
"Offshore outsourcing has affected the junior jobs. A huge number have been taken out of the profession," she said.
System developers and programmers have born the brunt of the changing market, with the number of advertised jobs falling from 36,000 to 35,000 between the last two quarters of 2005.
This downturn coincides with an increase in the number of work permits being awarded to overseas IT professionals, which rose by 15% to 21,448 in 2005 - double the number issued five years ago.
But demand for IT professionals with sector-specific business skills is expected to remain strong, with the finance sector experiencing a mini boom.
"This makes updating workforce skills particularly important. People really need to have their skills fine-tuned to have skills that are in demand and match those available overseas," said Virgo.
Recruitment firms have yet to feel any impact from offshoring, as they experience strong demand for staff with business skills.
"Demand at the lower level could be stagnating, but at the higher level, people are getting six or seven job offers. Niche skills are in demand. For any form of SAP, clients are paying good fees and salaries," said Brett Budden, director at Computer People.
Simon Wassall, European managing director at Harvey Nash, said demand for staff had risen by 20% over the past year. The finance industry, oil and gas industry and ISP sector are recruiting developers heavily, he said.