Nearly 20,000 City workers can expect to lose their jobs in the next two years, according to a recent report. But IT staff are safer than most, with experts confident they will weather the worst of the storm.
The Centre for Economics and Business Research (CEBR) says the credit crunch will see 11,000 City workers lose their jobs in 2008, and a further 8,200 go in 2009.
But a combination of factors will keep the IT job market buoyant, with banks needing to save money and stay one step ahead of their competitors.
Innovative IT is the now one of the best ways to stand out, said Peter Redshaw, research director at Gartner. "Customers move banks more often than they used to, and banks need to differentiate themselves and innovate. IT is one way for them to do this."
The skills shortage may have also helped IT cope with the effects of the credit crunch. Banks may have overstaffed some areas, such as investment banking and corporate finance, during better economic periods. But IT departments have been understaffed for a number of years.
Ralph Silva, an analyst at Towergroup, said, "Other areas of the banking industry got a little bit heavy when times were good. They hired too many people. In IT, this did not happen - there were not enough people."
Silva said it is the operations and maintenance IT workers who are least at risk of losing their jobs, because banks still need IT support and stability. Banks may well be cutting back on emerging technologies and new implementations, however, meaning IT staff specialising in this area may find fewer vacancies are available.
Brian Taylor, CTO at stock exchange Plus Markets, said IT jobs are valuable in the trading sector and are unlikely to be cut.
He said investment banks are still selectively hiring. "I do not think IT jobs are disappearing because IT actually saves money and provides the next generation of services and products."
But Redshaw said that operations IT staff should not feel too comfortable. Pressure to keep costs down could lead to some companies deciding to offshore their operations, or outsourcing to a third party in the UK.
He said, "I think a lot of jobs may be moving offshore or moving to third parties.
"Smaller banks will be looking for economies of scale, or they may want to launch an initiative without huge investment up-front with their own staff. Outsourcing could give them security in a volatile market."
Dominic Walley, management economist at CEBR and one of the authors of the report, said the nature of IT means it will not be as badly affected by less credit being available. The fact that banks have stopped lending money to one another, and stopped financing big deals, does not stop companies having their own money to spend on business investment.
He said, "We are expecting IT to be one of the stronger sectors over the next couple of years. Mergers and acquisitions activity has stopped, but companies' balance sheets are looking quite healthy at the moment."
It is important for businesses to make sure they do not stop investing in IT, said Redshaw. They need to find an optimum level of business investment: they cannot invest too much, but they also do not want to get left behind.
"We expect that the good times will return at some point," he said. "If you have not invested in the infrastructure, you cannot then scale up to take advantage of this. Under-investing can be damaging."
He also predicted that IT staff specialising in risk management and compliance would be in demand, because government is likely to bring in more legislation in the wake of the crunch.
Paul Pullinger, director of sales at Capgemini, said IT jobs are "more resilient", but said spending on IT is generally split into two - operations and "discretionary spend" on new projects. Although it might be expected that new-project spending will fall, he agreed with Redshaw and predicted anyone with specialist IT skills in compliance and risk management would continue to be in high demand.
Companies will continue to replace parts of their IT infrastructure, he said, but will probably do it in smaller pieces instead of embarking on entire overhauls. He said, "People will be making some tactical decisions about replacing parts of their systems. They will have to get very specific about what is going to help."
"IT budgets will grow more slowly," said Redshaw. "And there will be more pressure to find additional savings through IT. But companies see that it is one of the things that can help preserve their profit margins, so IT people are less at risk than others."