London is creating 39% of new IT roles in the UK, despite accounting for just 12% of the UK population, research by IT staffing company ReThink Recruitment has found.
"The regional imbalance in demand for IT skills is a consequence of two of the heaviest users of IT - financial services and central government - being concentrated in London. Some 20% of the total workforce in London is involved in financial services," says Michael Bennett, director at ReThink.
And this figure is likely to rise, says John Whiting, UK managing director of Harvey Nash's IT recruitment division.
He points to the leap in annual inward investment in London from £38bn to £52bn over the past two years, and a study by PricewaterhouseCoopers which predicts that London will become the world's fourth largest city economy by 2020, up from sixth.
"London is seen globally as a good place to do business. A lot of business that was previously transacted in New York is now being transacted in London because it is regarded as a more benign regulatory environment post-Enron.
"There is also a residual feelgood factor from London winning the 2012 Olympics, in terms of investment in infrastructure such as transport. That makes a difference when organisations are deciding where to transact a chunk of their business," says Whiting.
Aidan Anglin, managing director of IT recruitment services at Spring Technology, says, "The war for IT talent is heating up, especially in financial services, where the sector is seeing technology as a key differentiator. There is lots of integration work going on because there are so many mergers and acquisitions taking place, so those skills are also heavily in demand."
Recruitment activity is still strong in the public sector, but it has slowed now that many projects begun over the past few years as a result of government initiatives are fully staffed, says Simon Church, business development director at ReThink.
As a result, the gap between public and private sector pay rates is widening again, says Anglin.
In addition, consultancies in London are recruiting heavily. "[Recruitment is] driven by the changes their clients are going through and they are looking to hire leading-edge talent that other organisations also wanted, so they are prepared to pay a premium," says Whiting.
The kinds of roles that London-based organisations are recruiting for are also changing. Demand for more junior roles is shrinking in London, says Church, with helpdesk, support and even some development roles being taken offshore.
It is in the front and middle offices that financial services companies are recruiting heavily, as they create - and frequently update - bespoke systems to support complex transactions in areas such as credit derivatives, asset-backed securities and interest rate swaps.
Financial services companies, in particular, do not just want technical skills but business understanding, says Anglin.
"Even at the code-cutting stage, they want people with some understanding of how it all fits together. They are also asking for a broader range of skills than they have done in the past.
"For example, they want people with both C# and database skills, not just one or the other," he says.
Whiting agrees. "It is not about technology but how to use it to change the way they are doing business. The skill sets they are looking for are project directors and project managers, architects for specific technologies and enterprise-wide developments, and people who have skills in managing relationships with the business," he says,
In terms of technologies, Anglin sees heavy demand for database skills for trading applications, and C#, .net and modelling languages such as XML for front-office applications.
"Java remains popular, but growth in demand is no longer exponential," Anglin says.
Expertise in testing tools and J2EE is also being sought, Whiting says.
What is clear is that it is a candidates' market at the moment. Good quality candidates typically have two to five offers on the go at any one time, says Steven John, a team leader in the London office of IT recruitment firm GCS.
As a consequence, recruiters have had to up their game and shorten the recruitment process.
"They will now get first and second interviews done in one or two days, and they understand that they need to show candidates they are interested in them within 24 to 48 hours, otherwise candidates will look elsewhere for an employer that makes them feel valued.
"One of the most precious commodities in London is time, and if someone is going to travel one and a half hours to work and give their all to a company, they want to feel the company will give something back to them," says John.
It is now rare to close a recruitment assignment where the actual salary offered is not higher than the employer's original offering, says Whiting.
The shortage of candidates is also forcing the financial services sector to cast its net much wider than in the past, says John.
"Three or four years ago, the main gripe from people outside the financial services sector was that they were in a Catch 22 situation of not being able to get into it because they lacked experience. Now financial services companies are becoming more flexible about their prerequisites," he says.
Anglin agrees. "Companies are less concerned about hiring exact skill sets for permanent roles and more interested in recruiting adaptable people who can be trained and developed as technology and projects evolve," he says.